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notanotherone
08-02-2011, 08:52 PM
Sky is making "excessive profits" from its Sky Movies service, the UK's competition regulator has said, hinting at potential forthcoming reform of the pay-TV films market.

In a working paper published on the Competition Commission website, the watchdog reported early evidence that Sky "appears consistently to have earned profits in aggregate in excess of its cost of capital ['excess profits'] in the recent past and over a long period".

In August last year, Ofcom asked the commission to investigate concerns about Sky's sale and distribution of subscription premium pay-TV movies.

The media regulator was particularly concerned that Sky's near exclusive control over first-run movies from the six major Hollywood studios has given the firm an "incentive and ability to distort competition".

The Competition Commission's early findings, published in a document entitled 'Profitability of Sky', are part of a wider regulatory review of the pay-TV market.

Should the commission uphold these initial findings in its final report, Sky could be forced to reduce the wholesale price of its 10 film channels to other broadcasters, as well as change the way it makes subscription video on-demand rights available.

Ofcom's stance on Sky's movie rights came to light after its move last March to cut the wholesale price of Sky Sports 1 and Sky Sports 2 to other digital TV providers. Ofcom opted to refer the film rights investigation to the Competition Commission because it was outside of its powers.

Using data from consultants Oxera, the commission found that "Sky's profitability is not declining and the evidence we have seen suggest that its profits in the near future will increase".

The regulator added: "Some elements of Sky's excess profits may be due to successful innovation or the weakness of its competitors. However, we would not expect such profits to persist for a significant period of time.

"Although Sky has taken significant risks in the past, its most risky investments were many years ago and achieved short payback periods. Therefore it appears to us that Sky's excess profits can no longer be explained by the risk of its earlier investments."

A possible solution to the situation would be preventing Sky from signing exclusive deals with the major studios, meaning companies like the Amazon-owned LoveFilm could benefit from getting greater access to subscription movies.

However, Sky's financial muscle means the firm can pay significantly more than most other providers can afford - the firm paid ?343 million to the Hollywood studios in 2008, falling to ?272 million last year.

Speaking last summer, LoveFilm group digital officer Lesley Mackenzie said that LoveFilm would be eager to secure deals with all the studios, but "we also know that we can't afford to pay the studios what Sky is paying them".

Diablo13
08-02-2011, 09:54 PM
It will be interesting to see if this results in a Sly subscription price drop?

While I agree Sly make obscene amounts of money, I find the term "excessive profits" to be a strange one?
You can't do right for doing wrong in this country!
The idea of being in business is to make the best legal profit you can, something which many fail at and go under. Yet if you have a successful business you have to be careful not to be too successful?
Ok you should not be ripping people off to do it, but while Sly is quite expensive for some services, they are providing the services people signed up for, so they are not ripping people off.

Of course I would like to see services being reduced in price, but it is a bit much a government department singling out Sly, when they make such phenomenal profits from the taxing and then re taxing of fuel at the pumps?
How double standards is that!
When a successful companies profits are capped like this, there is no wonder so many of the best ones relocate overseas, leading to even more job losses and only the smaller or limited profit companies being left behind to offer only a few lower paid jobs?
The government should be very careful what it wishes for in controlling other companies, without applying those same conditions on itself?

cactikid
14-02-2011, 01:53 AM
not surprised they raked it in as you could watch the repeats of the repeats so many times so its about time we got some decent programs on sky atlantic,maybe throw in a few more will keep the people quiet lol

Diablo13
19-02-2011, 02:29 PM
I have to say that at the moment Sky Atlantic suits me fine.
Yes I know the programs are repeated a lot, but that works well for me because as usual the best programs start at 9 O clock. With the best will in the world you cannot watch or record all of them, so repeating a series like Boardwalk Empire at 0200 is very useful as you can then record it with no clashes.

Yesterday I phoned Sly to see if I could increase my half price offer period. I had a long and pleasant chat with a Scottish lady about all sorts, then eventually she got her supervisor to agree to my having a six month extension of the half price package I am on.
I do have to pay the extra ?10.50 for the HD service, but I can live with that, so a successful phone call!
Anyway during my chat with customer services it was mentioned that there are a lot of things in the pipeline, including new Sly HD+ boxes with multiple tuners. Lots is supposed to be going to happen with their services in the next year including yet more HD channels.
Horses mouth speculation?
Perhaps, but we will see what comes of it soon enough.