U.K. Commission Confirms BSkyB Has No Material Advantage in Pay TV Movies

BSkyB Satellite - Sign - 2010
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UPDATED: The Competition Commission cited the rise of streaming video providers Netflix and Lovefilm in the field it was asked to review, but it also signaled that BSkyB may have "too much" power overall.

LONDON - The U.K. Competition Commission on Thursday confirmed its recent provisional findings that pay TV giant BSkyB has no material advantage in pay TV movies these days.

The organization also confirmed that it would not suggest any regulatory action after in late May citing the rise of streaming video providers Netflix and Lovefilm in revising its stance from last summer.

"The Competition Commission has decided that Sky’s position in relation to the acquisition and distribution of movies in the first pay window does not adversely affect competition in the pay TV retail market," it said in its final report Thursday.

But it suggested that BSkyB's has a dominant role in the broader pay TV market in the U.K. "Together with Sky's large number of existing subscribers deriving from its historical position (Sky's incumbency advantage) and the restricted geographical coverage of Sky's main historical competitor, Virgin Media, it appeared to us that these factors resulted in Sky having too much market power in the pay-TV retail market," the Commission said.

It was only asked by Ofcom to look at pay TV movies though, and on that front the Commission was happy with the level of competition. It wasnt immediately clear if any of the comments in the final report could trigger calls for a look at another aspect of BSkyB's market power.

"In its final report, the CC has concluded that Sky Movies, which currently offers the first pay movies of all the big Hollywood studios, is not a sufficient driver of subscribers’ choice of pay TV provider to give Sky such an advantage over its rivals when competing for pay TV subscribers as to harm competition," the Commission said in a summary of its findings.

BSkyB acknowledged the final report in a statement. "Sky considers there to be overwhelming evidence that U.K. consumers are well served by strong competition between a growing number of TV providers, including those offering movies," it said. "As this dynamic marketplace continues to evolve, we remain committed to innovating for customers so that U.K. consumers continue to benefit from choice, value and innovation."

The agency has looked at BSkyB, because it holds film rights from the six major Hollywood studios in the first subscription pay TV window. This led competitors and critics to argue that the company, in which Rupert Murdoch's News Corp. has a 39 percent stake, has too much market power.

The Competition Commission now believes that the competitive landscape has changed with the market entrance of streaming video providers Netflix and Amazon.com's LoveFilm. As a result, BSkyB "no longer has a material advantage" over rivals, the CC said in May.

Laura Carstensen, chairman of the CC's inquiry group, said: 'We have seen significant change in pay TV movie services in the course of our inquiry and have considered the implications of these developments carefully in reaching our final views. It is clear that consumers now have a much greater choice than they had a couple of years ago when our investigation began."

She added: "LoveFilm and Netflix are proving attractive to many consumers, which reinforces our view that consumers care about range and price as well as having access to the recent content of major studios; and the launch of Sky Movies on Now TV, which ends the requirement to buy Sky Movies alongside a basic pay TV subscription, is a further significant development. Overall, we do not believe that Sky’s position with regard to first pay movie content is driving subscribers’ choice of pay TV provider."