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Eu probes hollywood { January 14 2003 }

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Brussels to probe TV rights in Hollywood
By Francesco Guerrera in Brussels and Tim Burt in London
Published: January 14 2003 21:56 | Last Updated: January 14 2003 21:56

Hollywood studios and European pay-television companies are being investigated by European Union antitrust regulators over the sale of TV rights to movies.

Brussels investigators are believed to have asked seven studios, including Warner Brothers, Columbia Tristar and Walt Disney, to explain the television distribution contracts for their movies - one of their fastest growing revenue streams.

The inquiry is still at a preliminary stage but it is understood the European Commission is concerned that the contracts might stifle competition between studios. Brussels was also believed to be concerned that the long-term, exclusive agreements between studios and broadcasters might prevent rival companies entering the pay-TV market, forcing consumers to pay higher prices.

Subscription television companies including BSkyB of the UK, Canal Plus in France and Sogecable of Spain have also been asked to provide details of their contracts with the studios.

The inquiry could lead to radical changes in the way Hollywood sells TV rights to EU broadcasters. If Brussels concludes that the contracts breach EU competition rules, it can force studios and broadcasters to change them - a measure it has already taken in the market for television rights to European club football.

The Commission declined to comment on Tuesday but it is understood it is focusing on the duration, exclusivity and payment terms of pay-TV film contracts. Two years ago, Mario Monti, EU competition commissioner, said long-term, exclusive film rights were a matter of concern.

People close to the situation said Brussels had noticed a number of similarities among contracts between studios and broadcasters. The commission is seeking reassurances that studios do not collude in setting prices and terms for movie rights - an allegation they deny. Contracts clauses that require broadcasters to match payments granted to one studio to its rivals are also likely to be scrutinised.

David Hulbert, president of Walt Disney Television (International), confirmed that the commission contacted the company. He said the studio was not engaged in exclusive or anti-competitive deals and pointed out that it supplied the French broadcaster Canalsatellite, part of Canal Plus, its rival TPS and the cable-TV industry in France.

"The studios themselves are worried by markets where one [pay-TV] platform has emerged as a dominant player," he said. "Elsewhere the industry is very competitive."

The Brussels inquiry follows a complaint by TPS, the French pay-TV company, about alleged anti-competitive film tie-ups between several Hollywood studios and Canalsatellite.

Canal Plus, part of the Vivendi Universal group, declined to comment.

Television rights are one of the studios' fastest-growing revenues streams, with European TV distribution rights tripling during the 1990s to more than $1.5bn a year. A number of pay-TV companies, led by BSkyB, are seeking reduced payments for movie rights and have threatened to drop studios that refuse to renegotiate more favourable terms.

Studio executives, however, have also expressed concern at the mounting power of pay-TV companies, which account for a growing proportion of their film earnings.

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