EU Accepts Paramount Concessions in Antitrust Probe of Studios' European Pay TV Deals

Brussels - H 2016
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The studio had offered concessions in the high-profile probe of geographical restrictions in film licensing deals between Sky and the six Hollywood majors.

An antitrust settlement between Viacom's Paramount Pictures and the European Union has been finalized as the EU has formally accepted the studio's concessions proposed earlier in the year.

The EU and the company announced the agreement on Tuesday.

The studio had offered concessions in the high-profile probe of geographical restrictions in film licensing deals between the British arm of European pay TV giant Sky and the six Hollywood studios. Film industry representatives in Germany and Italy, among others, had criticized the concessions.

The European Commission, which handles antitrust issues, said the concessions would be in effect for five years and would mean that the studio would not block pay TV providers from "responding to unsolicited requests" from consumers in the EU but outside of Sky's licensed territory.

The EU's antitrust probe into Sky and the other studios is continuing.

"Viacom and Paramount have given binding commitments neither to enforce nor renew the types of clauses in premium pay TV license agreements that were investigated by the European Commission and that restrict European Economic Area (EEA) pay TV broadcasters from responding to unsolicited requests by consumers located in a different territory in the EEA," the companies said. "No admission of liability has been made."

The European Commission added: "The commitments permit Paramount to continue to license films through premium pay TV output license agreements in Europe on an exclusive territorial basis. In addition, today’s agreement eliminates the possibility of fines and enables the Commission to close similar pending cases against Viacom and Paramount relating to [companies] in Italy, France, Germany and Spain."

The European Commission said it "has made commitments offered by Paramount legally binding under EU antitrust rules." It added: "These address the Commission's concerns regarding certain clauses in film licensing contracts for pay TV between Paramount and Sky U.K. These clauses prevented Sky U.K. from allowing EU consumers outside the U.K. and Ireland to access films via satellite or online."

In July 2015, the Commission in an antitrust complaint accused Paramount, Disney, NBCUniversal, Sony, 20th Century Fox and Warner Bros. of illegally restricting customers' access to content within the European Union in their licensing deals with Sky U.K., part of pan-European pay TV giant Sky. 21st Century Fox owns a 39 percent stake in Sky.

The Commission's argument was that the deals eliminate cross-border competition between pay TV firms and "partition the single market across national borders."

"European consumers want to watch the pay TV channels of their choice regardless of where they live or travel in the EU," said Margrethe Vestager, the European commissioner for competition, in January.

Critics of the Paramount settlement said territoriality is an important basis of the European film industry. "It's very simple: There is no viable German or European film industry without the possibility to negotiate film licenses exclusively on a territorial basis,” said Alfred Holighaus, president of German film industry body SPIO. “Territoriality is the financial basis for every European film that wants to transcend its national boundaries.”

In the EU antitrust probe, the accused companies face fines of up to 10 percent of their previous fiscal year's revenue if infringement can be proved.

Analysts have said that the studios are more at risk than Sky as territoriality — splitting rights into multiple national territories as opposed to selling a single, pan-European license — is a key part of their business model.