Sky U.K., Studios Reach Antitrust Deal With European Regulators Over Pay TV

Courtesy of Warner Brothers
'Lego Movie 2'

Disney, Warner Bros., Sony and NBCUniversal have agreed to comply with EU regulations and stop "geoblocking" their films on Sky UK, allowing subscribers from outside Britain to watch them.

European regulators have agreed to a deal proposed by four Hollywood studios and Sky U.K., ending an antitrust investigation into the studio's pay TV contracts with the British pay TV channel.

The European Commission on Thursday accepted the proposal from Sky, NBCUniversal, Disney, Warner Bros. and Sony that will allow European Union consumers to access the studios' films on Sky's service when outside Britain and Ireland.

The studios' licensing contracts with Sky U.K. have a clause requiring the pay TV network to "geoblock" their films on the European continent. But such practices are illegal under EU competition rules.

Sky also agreed it will no longer apply clauses in its contracts with NBCUniversal, Sony and Warner Bros. that ensured the studios' movies weren't made available on rival pay services in Britain and Ireland.

In July 2015, the European Commission filed an antitrust complaint against six studios over their licensing deals with Sky U.K., claiming that the geoblocking clause was a violation of EU law because it split up the European single market across national borders. As such, the commission argued, the contracts "eliminate cross-border competition between pay TV firms."

Paramount Pictures was the first studio to reach an agreement with the EU, back in 2016, by offering similar concessions preventing geoblocking.

At the time, Paramount's deal was sharply criticized by many inside the European industry, who said it would undermine the ability of national companies to negotiate exclusive film licenses on a territorial basis. This so-called territoriality is a key element of film financing in Europe and for many national pay TV services, a core part of their business model.

Thursday's agreement brings the antitrust investigation of Sky U.K. to an end, but the European Commission is proceeding with similar examinations of studio contracts with Sky's German and Italian services as well as with Canal Plus in France.