The EC has been investigating whether Sky’s film UK and Ireland deals with the major US studios, including Paramount, are anti-competitive, and yesterday’s agreement marks the first result of the inquiry.
The impact could be far-reaching for the European film and TV industries, with many producers and distributors claiming the EC’s concerns undermine the concept of territoriality, which is considered a key factor in financing content.
The studio contracts had ordered Sky to stop customers from access content outside the UK and Ireland, and overseas broadcasters could not make their studios-produced content available in Britain.
Paramount, in concessions to the EU, has agreed it will not re-introduce contractual obligations on European pay TV services to block its films while elsewhere in Europe.
In effect, this means viewers outside the UK and Ireland will be able to access Sky UK movies and other content through online TV services or satellites, while non-UK pay TV providers will be able sell Paramount films to UK and Ireland viewers in response to unsolicited requests.
Paramount will not be able to bring court action or tribunals in response to perceived violations of its broadcaster agreements.
The commitments, which Viacom-owned Paramount first offered to make in April, last five years, and cover pay TV and SVOD agreements. Paramount will no longer enforce existing conditions.
“Today’s agreement eliminates the possibility of fines and enables the Commission to close similar pending cases against Viacom and Paramount relating to broadcasters in Italy, France, Germany and Spain,” the two companies said in a statement.
The EC has been investigating Paramount, The Walt Disney Company, NBCUniversal, Sony, 21st Century Fox (which has a 39.1% stake in Sky) and Warner Bros. over the past year after launching an inquiry into each studio’s agreement with Sky, which broadcasts in the UK, Ireland, Italy, Austria and Germany.
The Commission’s preliminary view was that the deals included contractual restrictions that breached antitrust rules.
Without Paramount now signed off, the investigations into the other five continue. The EU can impose a fine of 10% of their global turnover if the companies are found to be in breach of rules.
The European Union was rocked by Great Britain’s decision to leave the confederation in June, but remains committed to the concept of a Digital Single Market.
With this as the regulatory backdrop, the Sky-studios agreements have come into question as the effectively limit content to the UK and Ireland.
The Paramount agreement could now lead to a greater push for an end to geoblocking, which would have impacts across the TV distribution industry.