Sky faces challenge to dominance in pay-TV market

BSkyB is facing a challenge to its dominant position as pay-TV provider, as Ofcom has referred the film aspect of the pay-TV market to the Competition Commission.

Ofcom ruled that Hollywood movies airing for the first time are particularly important in the pay-TV sector, as many consumers want to see films as close to the box office release as possible.

Sky has exclusive rights with the six Hollywood studios – this means that rivals are unable to offer competition to the channel, in terms of films.

Ofcom said that the way: “premium movies are sold and distributed through TVs creates a situation in which Sky has the incentive and ability to distort competition”.

As Ofcom feels it cannot deal with the situation itself, the situation has been referred to the Competition Commission, mentioning the right to show Hollywood films’ debuts on pay-TV and the wholesale supply of packages containing film channels specifically.. The Competition Commission now has up to two years to reach a decision on the matter.

Ofcom began investigating the pay-TV market in March 2007, and it has already resulted in Sky being forced to wholesale Sky Sports 1 and 2 to rivals at a fixed price. Sky is currently appealing against this decision.