Paramount Dodges EU Antitrust Fines With Pay-TV Pledge

  • Paramount ready to wipe out certain broadcaster clauses
  • Commitments would apply for five years for online, satellite

Viacom Inc.’s Paramount Pictures is set to dodge antitrust fines after pledging to make changes in response to a European Union crackdown on Hollywood pay-TV contracts that help to carve up markets along national lines.

Paramount offered binding commitments to address EU concerns over deals that prevent pay-TV viewers in one country from watching films and shows intended for customers in other parts of the 28-nation bloc, the European Commission said Friday. The regulator said it’s seeking industry feedback before deciding whether to formally accept the pledge.

Walt Disney Co., Time Warner Inc.’s Warner Brothers unit, Comcast Corp.’s NBCUniversal, and Sony Pictures as well as pay-TV giant Sky Plc are also embroiled in the EU’s competition case. Only Paramount has so far offered commitments, the commission said.

“Today’s agreement eliminates the possibility of fines,” Paramount said in a joint statement with Viacom. “The commitments permit Paramount to continue to license films through premium pay-TV output license agreements in Europe on an exclusive territorial basis.”

The EU regulator last year sent the companies a statement of objections laying out its antitrust concerns that clauses in the licensing deals between the studios and Sky “eliminate cross-border competition” and “partition the internal market along national borders.” This was followed by a three-day hearing in January, where the studios and Sky sought to rebut the regulator’s suspicions.

The commission argues that contracts prevented unsolicited “passive sales” of Sky U.K.’s pay-TV services to customers beyond the broadcaster’s licensed territory.

The EU said Paramount’s commitments would apply for five years and cover both standard pay-TV services and, to the extent that they are included in licenses with broadcasters, also subscription-based video-on-demand. Paramount’s pledge would cover both online services and satellite broadcasts.

Sky said in an e-mailed statement that it is “engaging with the European Commission” and will respond to the Paramount proposal, “as appropriate. ”

The deal, once finally approved, will allow the commission to close similar pending cases concerning the companies’ deals with broadcasters in Italy, France, Germany and Spain, they said in the statement.

The EU has made competition in digital markets a priority. Alongside clashes with Alphabet Inc.’s Google, 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 region.

Paramount’s proposed commitments concern licensing practices, and don’t affect copyright issues, EU spokesman Ricardo Cardoso told reporters.

Before it's here, it's on the Bloomberg Terminal.