Hollywood Studios, Sky Get EU Complaint Over Pay-TV Deals

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European regulators sent an antitrust complaint to six Hollywood studios, including 20th Century Fox, as well as Sky Plc, over concerns that movie-licensing deals restrict access to pay-TV around the continent.

Walt Disney Co., Time Warner Inc.’s Warner Brothers unit, Comcast Corp.’s NBCUniversal Media, Sony Pictures and Viacom Inc.’s Paramount Pictures will also get a so-called statement of objections, the European Commission said. The decision focusses on contractual restrictions preventing consumers outside the British Isles from watching Sky pay-TV.

The EU has made competition in the digital market place a top priority. Aside from clashing with Google Inc., antitrust chief Margrethe Vestager opened an investigation into barriers that block access to Internet-based services and content -- including films and TV shows -- across the 28-nation EU.

“European consumers want to watch the pay-TV channels of their choice regardless of where they live or travel in the EU,” Vestager said in a statement Thursday from Brussels.

Without these restrictions, “Sky U.K. would be free to decide on commercial grounds whether to sell its pay-TV services to such consumers” taking into account regulations such as the relevant national copyright laws, the commission said.

Soccer Matches

Sky Deutschland, Sky Italia, Vivendi SA’s Canal Plus and Spain’s DTS Distribuidora de Television Digital SA are still under investigation, the commission said.

The EU case into so-called absolute territorial protection clauses was triggered by a ruling from the bloc’s top court in 2011 that the English Premier League’s geographic restrictions limiting where TV channels can show its soccer matches breached competition law.

“What is probably of concern to the commercial broadcasters is how to structure their agreements to ensure that they can fully obtain the value of their copyrighted commercial works,” Tim Cowen, a competition lawyer with Preiskel & Co. in London, said by telephone. The commission’s new focus on the EU-wide digital market complicates that, he said.

Isleworth, England-based Sky said in a statement that it’s reviewing the EU statement of objections. Warner Bros. said it’s “cooperating fully” with the commission and declined to comment further. Nathaniel Brown, spokesman for Rupert Murdoch’s Twenty-First Century Fox Inc., declined to comment.

Twentieth Century Fox is the film studio of Twenty-First Century Fox. Murdoch also owns a 39 percent stake in Sky.

National Borders

The statement of objections lays out the EU’s preliminary view that clauses in the licensing deals between the studios and Sky “grant ‘absolute territorial exclusivity’ to Sky U.K. and/or other broadcasters” and “eliminate cross-border competition between pay-TV broadcasters and partition the internal market along national borders.”

Sending a statement of objections, or SO, laying out the EU’s case marks a rapid escalation of a probe Vestager inherited when she took office at the end of last year. While SOs are typically a precursor to fines in price-fixing probes, regulators can instead order companies to change their business practices, including contractual terms.

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