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Netflix, LoveFilm Impact On Hollywood U.K. Pay TV Deals to Be Examined by Regulator

Jin Lee/Bloomberg/Getty Images

The regulator will assess the changes that fresh players are making as satcaster BSkyB looks on.

LONDON – Netflix and LoveFilm are to be included in an investigation by the U.K.’s Competition Commission into Hollywood pay TV deals here.

U.K. satcaster BSkyB is already facing a call to loosen its pay TV grip on films through deals struck with the six major Hollywood studios – Disney, Warner Bros, Paramount, 20th Century Fox, Sony Pictures and Universal Studios – by the Competition Commission.

STORY: U.K. Broadcasters ITV, BSkyB Told To Do More for British Film

But the industry watchdog says it is now expanding its investigation to take into account the impact on the marketplace made by the launch of Netflix earlier this year here and the expanding portfolio of services offered by Amazon-owned LoveFilm.

In August last year the British regulator issued a provisional decision that BSkyB’s contracts were anti-competitive and called for the satcaster to loosen its grip to allow rivals to step up to the place.

But the Competition Commission said Wednesday it would now deliver its final findings in July, extending the time frame to take into account the changes in the film marketplace.

The powerful regulator said it needed to assess "potentially relevant" developments noting the arrival of US giant Netflix in the U.K. and Ireland in January.

And the need to assess LoveFilm’s growing business also hit the Commission’s radar since it has broadened its output from rental-by-post to streaming movies online.

BSkyB aims to launch its own Internet service, which will include Sky Movies, that will stand alone from its TV channel subscription offering.

According to the Commission: “We recognized in our provisional findings that, were developments in the market to occur, it would be necessary to take them into account before reaching our final views.”

It sad it is “considering their implications, alongside other evidence received since the provisional findings, both with regard to our assessment of whether there is an adverse effect on competition and for any potential remedies."

The commission has also published a working paper calling for submissions on how these new services might have opened the competition in the market,  a move providing BSkyB with a welcome fillip.

The British regulator is seeking views on a range of questions including to what extent services such as Netflix "substitute for traditional bundled pay TV services and Sky Movies"; and whether the new entrants mean that Sky Movies and the first pay TV window rights "are likely to remain as significant to consumers in choosing their pay TV retailer".