Margrethe Vestager

Commitments made by US film studio Paramount that enable British DTH firm Sky to provide premium content across European borders have been made legally binding.

The European Commission’s antitrust team, led by Margrethe Vestager (pictured), said the proposals address concerns regarding certain film licencing contracts between the two companies, which had prevented Sky UK from allowing EU consumers outside the UK and Ireland to access films via satellite or online.

They had also required Paramount to ensure that broadcasters other than Sky UK are prevented from making their pay-TV services available in those countries.

“The commitments will apply throughout the [European Economic Area] for a period of five years and cover both standard pay-TV services and, to the extent that they are included in film licensing contracts for pay-TV with a broadcaster, subscription video-on-demand services as well,” the Commission said.

“The commitments cover both online services and satellite broadcast services.

Finally, the commitments also contain a non-circumvention clause, as well as clauses on the review of the commitments and the appointment of a monitoring trustee.”

Paramount proposed the commitments after bilateral deals agreed between it – and five other US studios – with Sky were singled out in a European Commission competition probe in July 2015.

The EC said Paramount would be fined up to 10% of its total annual turnover if it breached the commitments, without the need to find a violation of EU competition rules.

The authority is continuing to investigate the other five studios in its probe: Disney, NBCUniversal, Sony, Twentieth Century Fox and Warner Bros.

Sky posts solid results in tough market

Sky recently posted full-year adjusted revenue up 7% to £11.97bn (US$15.5bn), with adjusted EBITDA up 8% over the period to £2.18m (US$2.87m).

However, churn increased from 9.8% to 11.2% on factors including TV package price rises and lower retention discounts.

Liberum analysts have reiterated their sell recommendation, citing increasing sports rights cost inflation and rising competition dynamics.

“These competition dynamics will potentially undermine their pricing power and therefore revenue growth potential,” they said.