Sky Box Office Figures Challenged In Premium Movie Row
Sky’s dominance of the UK’s premium film pay-per-view market is set to be challenged by TV rights regulator Competition Commission next month, with claims that the satellite TV giant needs to give other providers and channels a chance with some of the latest Hollywood hits.
The Competition Commission had reported in February that Sky had made ’excessive profits’ from their Sky Movies and Sky Movies Box Office series of channels, having recorded official complaints from a number of competing services as far back as August.
This suggests that an official reform (with guidelines on how much a company can own in the way of movie broadcast rights) might be in the works, with a research paper from the watchdog stating that Sky: “appears consistently to have earned profits in aggregate in excess of its cost of capital ['excess profits'] in the recent past and over a long period.”
General broadcasting regulator Ofcom also expressed their worry over the state of the market, claiming that Sky’s dominance of first-run film contracts (from all six major movie studios in Hollywood) gave them an “incentive and ability to distort competition”.
Whilst the reported annual running costs of Sky Movies is said to be in excess of £280m, the service claims to reach over 30% of pay-TV subscribers in the British Isles through their own-brand Sky service and channels on Virgin Media. Money is also made from leasing rights for selected films to rival broadcasters at an ‘excessive’ rate.
Rivals such as LoveFilm are complaining about Sky’s presence in the digital market as well, with Sky’s high-quality subscription VOD service for movies forcing other online providers to change their strategy and compete amongst themselves in order to survive.
The commission summarised the mood in their study, stating: “It is likely that Sky’s rivals would have paid lower prices for Sky’s… movie channels, [and] would have been able to innovate more in terms of having greater flexibility to package and promote products, and would have been able to launch products earlier.”
A spokesman for the Competition Commission spokesman announced that these findings_: “These are preliminary working papers and thus represent our latest thinking, rather than conclusions on any issue. The provisional finding will be published in August.”
With Sky having previously been forcibly cut back on broadcast rights before by regulators (such as with live sport), is it proof that there is such a thing as too much success?
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[...] Hastings, the CEO of the company as a whole, made an admission that the Competition Commission should not impede on Sky’s business practices, despite a planned ruling potentially opening [...]