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Movie Sales to Pay-TV Broadcasters Probed by European Union

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Warner Bros. Studios Stand in Burbank
Cartoon characters are displayed on a mural at Warner Bros. Studios in Burbank, California. Time Warner Inc.’s Warner Brothers unit, 21st Century Fox Inc., and three other movie studios face a European Union antitrust probe into licensing deals with pay-TV broadcasters such as British Sky Broadcasting Group Plc and Vivendi SA’s Canal Plus. Photographer: Patrick T. Fallon/Bloomberg

Jan. 13 (Bloomberg) -- Rupert Murdoch’s 21st Century Fox Inc., Time Warner Inc.’s Warner Brothers unit and three other movie studios face a European Union antitrust probe into licensing deals with pay-TV broadcasters including British Sky Broadcasting Group Plc and Vivendi SA’s Canal Plus.

Regulators will target contracts that prevent EU broadcasters from selling movies outside their home nation in an investigation that also involves Sony Pictures, Comcast Corp.’s NBCUniversal Media and Viacom Inc.’s Paramount Pictures, the European Commission said in an e-mailed statement today.

“If you subscribe to a pay-TV service in Germany and you go to Italy for holidays, you may not be able to view the films offered by the service” on digital devices, the EU’s antitrust chief Joaquin Almunia told reporters at a Brussels press conference.

Almunia said the probe into so-called absolute territorial protection clauses will check if they violate a recent court ruling that said such restrictions for the sale of soccer rights to TV broadcasters were illegal. The EU’s highest court ruled in 2011 that the English Premier League’s geographic restrictions on TV channels showing its soccer matches breached competition law, in a case triggered by a British pub landlady who bought a cheaper Greek decoder card to show games in the U.K.

Potential Customers

“If you live in Belgium and you want to subscribe to a Spanish-speaking service, you may not be able to subscribe at all if there is absolute territorial exclusivity,” Almunia said today.

Potential customers of such pay-TV services may be willing to pay as much as 1.6 billion euros, or 6 percent of pay TV revenue in 2009, according to a March 2012 report by Plum Consulting for the commission.

The EU isn’t seeking to force movie studios to offer licensing deals to cover the entire 28-nation bloc or to undermine the sale of movie rights country-by-country, Almunia said.

Soccer TV rights wouldn’t be probed because such terms “have been eliminated or are being eliminated,” in the wake of the court ruling, he told reporters at a Brussels press conference.

The EU said its investigation will also focus on contracts with Sky Deutschland, Sky Italia and Spain’s DTS Distribuidora de Television Digital SA.

Antoine Banet-Rivet, a Canal Plus spokesman, and Alice Macandrew, a spokeswoman for BSkyB, declined to comment on the probe. 21st Century Fox and Sony didn’t immediately respond to requests for comment.

To contact the reporters on this story: Aoife White in Brussels at awhite62@bloomberg.net; Gaspard Sebag in Brussels at gsebag@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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