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

Brussels - H 2016
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The proposed measures, subject to final approval, would be in effect for five years, with Viacom and its studio arm saying they were "gratified to have reached an early and satisfactory resolution."

Viacom's Paramount Pictures has offered the European Union antitrust regulator concessions in a 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, the European Commission said Friday.

The Commission, which handles antitrust issues, said the concessions would be in effect for five years and 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. It highlighted that its antitrust investigation into Sky and the studios was continuing.

"Viacom and Paramount Pictures are gratified to have reached an early and satisfactory resolution with the European Commission regarding the European Commission’s statement of objections adopted in July 2015," the entertainment company and its studio arm said. "Subject to final approval, Viacom and Paramount will give binding commitments to neither enforce nor renew the types of clauses in premium pay TV license agreements that were described in the statement of objections and that restrict European Economic Area (EEA) broadcasters from responding to unsolicited requests by consumers located in a different territory in the EEA. No admission of liability will be made."

They 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 broadcasters in Italy, France, Germany and Spain."

Sky also commented on the development. "We are engaging with the European Commission in its ongoing inquiry to examine cross-border access to film content," a spokesman said. "We will respond to the Commission's consultation on the Paramount proposal, as appropriate."

In July, 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 European Commission is inviting comments from interested parties on commitments offered by Paramount Pictures to address competition concerns relating to contractual clauses preventing the cross-border provision of pay TV services," the Commission said in a statement on Friday, again highlighting its "concerns relating to contractual clauses in certain bilateral agreements between six major film studios, including Paramount Pictures, and Sky U.K., under which the studios license their output of films over a certain period of time for pay TV to Sky U.K."

Said the Commission: "These clauses appear to prevent Sky U.K. from allowing EU consumers located elsewhere to access, via satellite or online, pay TV services available in the U.K. and Ireland. Some agreements also contain clauses requiring the studios to ensure that, in their licensing agreements with broadcasters other than Sky U.K., these broadcasters are prevented from making their pay TV services available in the U.K. and Ireland."

The Commission's argument is 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.

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.