The European Commission has recently announced that it has sent a Statement of Objections to six major films studios in the U.S., namely Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros along with Sky UK with regard to cross-border provision of pay television services that are available in the UK and Ireland markets.
Margrethe Vestager, the EU commissioner who is in charge of competition policy, explained, “European consumers want to watch the pay-TV channels of their choice regardless of where they live or travel in the EU. Our investigation shows that they cannot do this today, also because licensing agreements between the major film studios and Sky UK do not allow consumers in other EU countries to access Sky’s UK and Irish pay-TV services, via satellite or online. We believe that this may be in breach of EU competition rules. The studios and Sky UK now have the chance to respond to our concerns.”
The EU Commission alleges that all six film studios have entered into bilateral agreements with Sky UK to place contractual restrictions that prevent consumers from accessing pay television services via satellite or online when they are located outside of the UK or Ireland in Europe.
Moreover, the EU Commission believes that without such restrictions, Sky UK would have been “free to decide on commercial grounds whether to sell its pay-TV services to such consumers requesting access to its services, taking into account the regulatory framework including, as regards online pay-TV services, the relevant national copyright laws.”
Back in January 2014, the EU Commission had announced that it was opening formal antitrust proceedings involving U.S. film studios Twentieth Century Fox, Warner Bros., Sony Pictures, NBCUniversal, Paramount Pictures and major European pay television broadcasters including BSkyB of the UK, Canal Plus of France, Sky Italia of Italy, Sky Deutschland of Germany and DTS of Spain.
The said investigation focused on looking into particular provisions stated in the licensing agreements between the U.S. studios and the broadcasters when it comes to providing services across borders.
As the Commission explained, “The provisions granting ‘absolute territorial protection’ ensure that the films licensed by the US studios are shown exclusively in the Member State where each broadcaster operates via satellite and the internet. These films cannot be made available outside that Member State, even in response to unsolicited requests from potential subscribers in other Member States.”
To date, the Commission has also said that it still continues to investigate other major European broadcasters licensing agreements with the film studios. In Sky UK’s case though, the Commission stated that it has managed to find clauses in licensing agreements that require Sky UK to block access to films on its online pay TV services (known as geo-blocking) or satellite pay TV services.
The said clauses reportedly restrict Sky UK’s ability to “accept unsolicited requests” for pay TV services from customers located in EU member states where Sky UK is not promoting or advertising its services. Moreover, the Commission also found certain clauses that require studios to prevent other broadcasters (except for Sky UK) from offering their pay TV services in the UK and Ireland.
These findings, in the Commission’s view, represents “absolute territorial exclusivity,” which eliminates cross-border competition among pay television broadcasters.
Meanwhile, a spokesperson from the Walt Disney Company has told CNN Money, “The impact of the Commission’s analysis is destructive of consumer value and we will oppose the proposed action vigorously.”
In addition, a spokesperson from Warner Bros. has also said that the company is giving its full cooperation with regard to the investigation.
Twentieth Century Fox has declined to comment while Sky has said it would give a response “in due course.”