The European Commission has accepted legally binding commitments offered by Disney, NBCUniversal, Sony Pictures, Warner Bros. and Sky under European Union antitrust rules. These commitments address the concerns of the Commission about certain clauses in movie licensing contracts of these studios for pay-TV with Sky UK. It theoretically opens up the European market, but Sky UK is not planning to start actively offering its services elsewhere. Meanwhile the future relationship between the United Kingdom and the European Union remains unclear.
The clauses prevented Sky UK from allowing European Union consumers outside the United Kingdom and Ireland to subscribe to Sky UK pay TV services to access movies via satellite or online.
They also required NBCUniversal, Sony Pictures and Warner Bros. to ensure that broadcasters other than Sky UK are prevented from making their pay-TV services available in the UK and Ireland.
Such clauses restrict the ability of broadcasters to accept unsolicited requests, known as “passive sales”, for their services from consumers located outside their licensed territory. The Commission had concerns that this may eliminate cross-border competition between pay-TV broadcasters and partition the European Union single market along national borders.
In November 2018 and in December 2018, Disney, NBCUniversal, Sony Pictures, Warner Bros. and Sky offered commitments aimed to address the concerns of the Commission, which consulted on them.
The Commission said it is satisfied that the commitments offered by Disney, NBCUniversal, Sony Pictures and Warner Bros. address its concerns, and has made them legally binding on the studios.
Disney, NBCUniversal, Sony Pictures and Warner Bros. have now committed not to apply these clauses in existing film licensing contracts for pay-TV with any broadcaster in the European Economic Area.
They have also committed to refrain from including such clauses in film licensing contracts for pay-TV with any broadcaster in the EEA.
A similar agreement was previously reached with Paramount.
Sky will neither apply existing clauses nor include new ones in its film licensing contracts for pay-TV with Disney, Fox, NBCUniversal, Paramount Pictures, Sony Pictures and Warner Bros.
The commitments will apply throughout the EEA for a period of five years. They cover both online and satellite pay-TV services and, to the extent that they are included in the licences with a pay-TV broadcaster, they also cover subscription video-on-demand services.
All current and future subsidiaries of the committing parties are covered by the commitments. This means that, following the acquisition of Fox by Disney, the commitments will also apply to Fox.
If a company breaks such commitments, the Commission can impose a fine of up to 10% of the worldwide turnover of the company, without having to find an infringement of the EU antitrust rules.
The European Commission is continuing similar cases of studio contracts with Sky operations in Germany and Italy.