U.K. Regulator: BSkyB No Longer Has Material Advantage in Pay TV Movies

BSkyB Satellite - Sign - 2010
Chris Ratcliffe/Bloomberg/Getty Images

The Competition Commission cited the rise of streaming video providers Netflix and Lovefilm in revised findings.

The U.K.'s Competition Commission has found that pay TV giant BSkyB no longer has a material advantage over competitors in terms of its pay TV movie offerings amid the rise of streaming video providers.

It also signaled that it would no longer suggest regulatory action on this issue.

The news came in provisional findings from its investigation into movies on pay TV and marks a reversal of its original findings in August.

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 40 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 as consumers no longer have to subscribe to BSkyB to get access to movies.

The Competition Commission also said that the relative importance of new film releases to U.K. consumers has declined, with the range and cost of content available being as, if not more, important.

Lovefilm and Netflix have in many cases acquired rights to films from other studios and the big six studios in subsequent pay TV releases windows.

UBS analyst Polo Tang said that the Competition Commission makes it "unlikely that remedial [regulatory] action will be taken" against BSkyB, which he said should be "a small positive" for the company.

The Commission will now consult further on its revised findings. "BSkyB will continue to engage with the Competition Commission during the final stage of its investigation," BSkyB said.

Email: Georg.Szalai@thr.com
Twitter: @georgszalai