The Competition Commission (CC) has provisionally found that the stronghold Sky has of film rights means that other pay-TV providers are unable to effectively compete.
As a result, the Competition Commission believes that this has led to higher prices and reduced options for consumers.
Sky has exclusive rights to films from the six major Hollywood studios, enabling the broadcaster to be the first to show the latest films on its Sky Movies channels. This premiere film access has broad appeal to consumers and has helped drive Sky subscriptions to double that of all other traditional pay-TV retailers combined, thus strengthening Sky’s bidding capabilities and perpetuating Sky’s advantage.
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The Competition Commission said that ‘would-be rivals are unable to bid successfully against Sky for these rights’ and that as a result, ‘subscribers to Sky Movies are paying more than they would otherwise and there is less innovation and choice than we would expect in a market with more effective competition’.
The Competition Commission acknowledges that there are emerging technologies, such as streaming films over the internet to a Smart TV, but that it has ‘not seen evidence that these are likely to diminish Sky’s bidding advantage to any meaningful degree in the foreseeable future’.
Remedies have been suggested and further information is expected in the coming months, however its final decision of whether competition has been restricted will be made early next year.
Dr Rob Reid, senior policy adviser for Which?, said: ‘This is an important market for consumers and it’s clear that the regulator, Ofcom, and Competition Commission are concerned that we could be getting better deals. If this investigation finds Sky at fault, then the Commission must act quickly to put in place robust measures to make competition work.’
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