Sky Movies makes “excess profits”
February 8, 2011
The UK Competition Commission probe into BSkyB finds it has “consistently” earned “excess profits” on its Sky Movies packages, that’s the conclusion of a working paper published on its website.
It says that while some of Sky’s excess profits may be due to innovation or competitor weakness, “we would not expect such profits to persist for a significant period of time…. it appears to us that Sky’s excess profits can no longer be explained by the risk of its earlier investments.”
The pay-TV operator is being investigated on accusations it is distorting competition for Hollywood movies in the market. The probe, requested by Ofcom last summer is examining rights sold by movie studios to show films on pay-TV for the first time, and the supply of movie-channel packages.
The Commission aims to publish provisional findings of its review in April, and a final report by the end of the year.
In a statement Sky said: “We believe Sky’s profitability today reflects its past investments and its success in delivering highly valued products to customers.”