We hope you've got your popcorn ready because yesterday, there was a new development in the ongoing Sky UK / Hollywood Studios pay-TV investigation: the European Commission announced that it has accepted the commitments offered by Paramount Pictures, which are now legally binding.

July 2015: Statement of Objections

The Commission sent a Statement of Objections to Sky UK and six US film studios (including Paramount) in July 2015. The Statement addressed certain clauses in the licensing contracts between Paramount and Sky UK which:

  1. prevented Sky UK from allowing EU customers outside the UK and Ireland to access Paramount films via satellite and online; and
  2. required Paramount to ensure that broadcasters other than Sky UK were prevented from making their pay-TV services available in the UK and Ireland.

The Commission was mainly concerned that these clauses raised competition issues for pay-TV broadcasters which were operating on a cross-border basis, and consequently might restrict the EU's Single Market.

April 2016: Paramount's Commitments

In response, Paramount offered four proposed commitments to the Commission in April 2016. These were:

  1. when licensing its film output for pay-TV to a broadcaster in the EEA, Paramount would not (re)introduce contractual obligations, which prevent or limit a pay-TV broadcaster from responding to unsolicited requests from consumers within the EEA but outside of the pay-TV broadcaster’s licensed territory (No “Broadcaster Obligation”);
  2. when licensing its film output for pay-TV to a broadcaster in the EEA, Paramount Pictures would not (re)introduce contractual obligations, which require Paramount to prohibit or limit pay-TV broadcasters located outside the licensed territory from responding to unsolicited requests from consumers within the licensed territory (No “Paramount Obligation”);
  3. Paramount Pictures would not seek to bring an action before a court or tribunal for the violation of a Broadcaster Obligation in an existing agreement licensing its film output for pay-TV; and
  4. Paramount Pictures would not act upon or enforce a Paramount Obligation in an existing agreement licensing its film output for pay-TV.

The latest development

Following the usual market testing of the commitments, the European Commission yesterday announced that it has accepted them. Paramount's commitments look wide-reaching: they apply to online and satellite broadcast services, and cover the standard pay-TV services as well as relevant subscription video-on-demand services. The Commission also stated that the commitments will last for five years and apply throughout the European Economic Area.

The investigation into the other five studios continues, with the other companies still disputing the Commission's allegations. But this latest announcement could well act as a trigger for further developments (and potentially even proposals of commitments), so stay tuned for a sequel coming to a screen near you soon.