BSkyB Gets U.K. Regulatory Reprieve in Movie Business Probe

British Sky Broadcasting Group Plc (BSY)’s pay-TV movie service doesn’t have enough control over movie rights in the U.K. to harm competition following rival offers from online services, the U.K. Competition Commission said in its final ruling today.

Sky Movies “is not a sufficient driver of subscribers’ choice of pay-TV,” the Competition Commission said in a statement. The regulator already said in May that Internet offerings such as Netflix Inc. (NFLX) and Amazon.com Inc. (AMZN)’s Lovefilm have loosened BSkyB’s dominance over first rights to show films, in a reverse of its earlier findings.

The commission said previously that it was considering forcing BSkyB, the nation’s largest pay-TV provider with more than 10 million subscribers, to resell movie content to rivals. The regulator provisionally found a year ago that the market control of BSkyB led to higher prices and reduced choice for subscribers.

U.S. streaming-service Netflix started offering movies and TV shows in the U.K. in January and Lovefilm expanded its service in the same month. In response, BSkyB is bringing out its own Web-television service, dubbed Now TV, to gain new customers.

The commission said today that the launch of Sky Movies on Now TV offers consumers a choice to subscribe to Sky Movies separately from their subscription to other pay-TV content.

BSkyB shares yesterday rose 1.7 percent to 724.50 pence in London. The stock has slipped 1.1 percent this year.

`Overwhelming Evidence'

“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,” BskyB said in a statement today.

BSkyB holds exclusive first rights to play releases from major Hollywood studios and the Isleworth, England-based company’s size has made it difficult for smaller rivals to bid against it, the commission said last year. Media regulator Ofcom had formerly required the broadcaster to wholesale its sports content, a decision challenged by BSkyB.

Virgin Media Inc. (VMED), the U.K.’s second-largest pay TV company, said in May that it “strongly disagrees” with the commission’s findings as the offerings of Lovefilm and Netflix haven’t changed BSkyB’s dominant position.

To contact the reporters on this story: Jonathan Browning in London at jbrowning9@bloomberg.net; Kristen Schweizer in London at kschweizer1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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