Markets for broadcast and online TV services could be radically shaken up by an on-going antitrust investigation by the European Commission into pay TV services. The investigation concerns contracts between providers of pay TV services in Europe and major U.S. film studios for the licensing of audiovisual content along national lines. According to a Statement of Objections released in July, 2015 the Commission’s preliminary position is that these agreements are anticompetitive. The outcome of this investigation has the potential to spell the end in Europe for territory based restriction of content, or geo-blocking, with significant implications for both television broadcasters and providers of online streaming services.
The Commission’s investigation concerns contracts between major providers of pay TV services in Europe, including Sky, Canal Plus and DTS, and six major US film studios: Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros. It recently sent a Statement of Objections to Sky UK and the film studios in connection with their bilateral contracts. These grant Sky UK the broadcasting rights for the UK and Ireland only and require Sky UK to put in place measures to restrict access by customers in other Member States. The Commission’s preliminary view is that these contractual provisions are anticompetitive and, by requiring Sky UK to refuse access to unsolicited requests to pay for its service from individuals in other Member States, they result in the elimination of cross-border competition and a partitioning of the internal market along national lines.
National barriers within the internal market for digital services have become an increasing source of concern for the Commission, particularly in connection with its Digital Single Market Strategy. The Strategy specifically refers, among other things, to the prevention of ‘unjustified’ geo-blocking, potential reform of the audiovisual media service legislation and breaking down barriers to cross-border access to copyright-protected content services and their portability. In this context and further to the Court of Justice’s decision in 2011 in the joined Premier League and Murphy cases (C-403/08 and C-429/08), the Commission’s preliminary view may be the writing on the wall for the current distribution model for providers of pay TV services and their licensors. A finding that their contractual provisions are anticompetitive would result in a radical shift in the market for broadcasting rights, as the ability to distribute content subject to territorial restrictions would be prohibited or severely limited.