By Vanessa Mock
BRUSSELS--European regulators Monday launched a probe into some
of Europe's leading pay-TV channels and major U.S. film studios,
saying they may have violated antitrust rules in their licensing
deals.
The U.K.'s British Sky Broadcasting Group PLC, France's Société
d'Édition de Canal Plus, Italy's Sky Italia, Sky Deutschland AG of
Germany and Spain's Distribuidora de Televisión Digital SA, or DTS,
which operates under the Canal Plus brand in Spain, are all under
formal investigation over concerns that their licensing agreements
may have flouted European Union rules by preventing viewers in
other countries from accessing their films. 21st Century Fox Inc.
owns part of BSkyB and Sky Deutschland, and all of Sky Italia.
Canal Plus owns part of DTS.
The probe also centers on five leading film studios: 21st
Century Fox's Twentieth Century Fox, Time Warner Inc.'s Warner
Bros., Sony Corp.'s Sony Pictures Entertainment, Comcast Corp.'s
NBCUniversal and Viacom Inc.'s Paramount Pictures Corp.
Walt Disney Co. isn't part of the investigation because it had
already started changing its contracts when the inquiry began, a
person familiar with the probe said.
BSkyB, Canal Plus and DTS declined to comment on the
investigation. Sky Italia and Sky Deutschland did not immediately
return calls.
"We intend to cooperate fully with the European Commission's
investigation," said a spokesman for Warner Bros. "It is premature
to comment further at this time."
Representatives for Fox, Sony Pictures and Paramount declined to
comment. Universal didn't immediately comment.
"The investigation will allow us to look at the restrictions in
agreements between film studios and pay-TV broadcasters that grant
'absolute territorial exclusivity' to these broadcasters," the EU's
antitrust chief, Joaquín Almunia, said. "More and more European
citizens watch films, use pay-TV services broadcast by satellite
and increasingly available through online streaming."
Deals signed between studios and pay-TV channels are done on an
exclusive and territorial basis. For instance, a studio will
typically draw up an agreement to sell popular content such as
films with a single pay-TV broadcaster for each European Union
member state, rather than across all 28 EU countries. The
commission said it wasn't trying to get studios to sell films on a
pan-European basis or to scrap territorial deals. But it has
worries in regard to specific cases, such as requests from viewers
in other member states, or regarding existing subscribers who
travel or move abroad.
"Our investigation will focus on restrictions that prevent the
selling of the content...[to] viewers located in other member
states," Mr. Almunia said. "If I live in Belgium and want to
subscribe to a Spanish TV service, I may not be able to subscribe
at all if there is absolutely territorial exclusivity."
Mr. Almunia told reporters in Brussels that investigators would
also look at instances where European nationals were unable to
access audiovisual content when traveling or moving abroad. "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 film offered by that
service...that you have on your laptop during your holidays."
Licensing to foreign television networks has contributed an
increasingly significant share of studios' revenue in recent years
as sales of DVDs have cratered. Typically, studios use popular new
movies as the bait for wide-ranging deals that include rights to
hundreds of titles from their libraries of older films and
television shows.
Independent studio Metro-Goldwyn-Mayer Inc. recently reported
that it generated $396.2 million, or 37% of its total revenue, from
world-wide television licensing in the first nine months of
2013.
The launch of the commission probe comes after a top European
court ruled in 2011 that territorial licensing restrictions for
English Premier League soccer matches wiped out competition between
broadcasters and carved up the market along national borders.
Mr. Almunia said that those exclusivity deals were being
eliminated for soccer, but that this wasn't the case for films. "We
will carefully examine the principle set out by the court," Mr.
Almunia said.
21st Century Fox until last year was part of the same company as
Wall Street Journal parent News Corp.
Ben Fritz, Erich Schwartzel and Simon Zekaria contributed to
this article.
Write to Vanessa Mock at vanessa.mock@wsj.com
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