Watchdog hits Sky over cost of pay movies

BSkyB is set to lose its "stranglehold" on Hollywood blockbusters shown on pay-TV after the competition watchdog ruled that it unfairly dominated the market. The regulator calculated that customers were being overcharged to the tune of £60m a year.

The Competition Commission announced yesterday that Sky's control over pay-TV movie rights in Britain "is restricting competition between pay-TV providers, leading to higher prices and reduced choice and innovation for subscribers".

Insiders at Sky, whose forthcoming movies include Tron: Legacy, Inception and The Town, spoke of their bemusement at the preliminary findings and vowed to fight it "pretty hard".

The commission opened its investigation into pay-TV movie rights after the issue was referred to it by Ofcom last August. The final report is due by August next year.

Sky holds the exclusive rights to movies from all six major Hollywood studios in the first subscription window for pay-TV. The commission believes that its incumbency advantage means rivals are unable to challenge it for rights. It proposes possible remedies of either restricting the number of exclusive agreements with studios or changing the nature of those deals.