BSkyB Wins Regulatory Movie Business Reprieve On Netflix
By Jonathan Browning - May 23, 2012 3:56 AM ET
British Sky Broadcasting Group Plc (BSY) no longer has too much control over pay-TV movie rights following rising competition from online services Netflix Inc. (NFLX) and Amazon.com Inc. (AMZN)’s Lovefilm, according to a U.K. regulator.
The new offerings have loosened BSkyB’s dominance over first rights to show films, the Competition Commission said today in a statement, in a reverse of its earlier findings. The regulator provisionally found in August that BSkyB’s control over the market led to higher prices and reduced choice for subscribers.
“Competition between providers of movie services on pay TV has changed materially and, as a result of these changes, consumers now have much greater choice,” Laura Carstensen, who ran the regulator’s investigation, said in the statement. “Lovefilm and Netflix offer services which are attractive to many consumers and they appear sufficiently well resourced to be in a position to improve the range and quality of their content further.”
BSkyB, the nation’s largest pay-TV provider with more than 10 million subscribers, is facing increased competition from Internet TV services after U.S. streaming-service Netflix started offering movies and TV shows in the U.K. in January and Lovefilm expanded its service in the same month. The commission said previously that it was considering forcing BSkyB to resell movie content to rivals.
In response, BSkyB is bringing out its own Web-television service, dubbed Now TV, to gain new customers.
BSkyB shares rose as much as 0.9 percent to 697 pence and were up 0.7 percent at 8:53 a.m. in London. The stock has slipped 5 percent this year.
BSkyB holds exclusive first rights to play releases from major Hollywood studios and the Isleworth, England-based company’s size has made it difficult for smaller rivals to bid against it, the commission said in August.
BSkyB said it will continue to engage with the commission during the final stage of the investigation. Media regulator Ofcom had formerly required the broadcaster to wholesale its sports content, a decision challenged by BSkyB.
Virgin Media Inc. (VMED), the U.K.’s second-largest pay TV company, said today it “strongly disagrees” with the commission’s findings. “The recent emergence of providers, such as Lovefilm and Netflix, has done nothing to impact Sky’s advantage,” the company said today in an e-mailed statement.
To contact the reporter on this story: Jonathan Browning in London at email@example.com