EU Probing Hollywood Film Contracts

From Reuters

The European Commission on Wednesday said it is investigating whether a standard clause in the contracts between Hollywood film companies and European television networks is anti-competitive.

Commission spokeswoman Amelia Torres said a preliminary inquiry was underway into a single clause that requires the networks to pay the same price to all companies for films.

"If they accept to pay a certain price for a certain number of films for a certain period with a Hollywood studio, [then] on the basis of this clause they promise to pay the same price on the same preferential terms to other Hollywood studios," she said at a London news conference.

That, she pointed out, might keep prices artificially high by limiting competition.

The commission, the European Union's executive arm, also is concerned that long-term, exclusive agreements between studios and broadcasters might prevent rival companies entering the pay-TV market, forcing consumers to pay higher prices.

Torres would not identify the studios, but news reports said seven have been contacted by regulators, including AOL Time Warner Inc. unit Warner Bros., Sony Corp. unit Columbia TriStar and Walt Disney Co.

The studios are being asked to explain the television distribution contracts for their movies, one of the fastest-growing revenue streams for Hollywood.

Subscription television companies, including Britain's BskyB, France's Canal Plus and Spain's Sogecable, also have been asked to provide details of their contracts with the studios, according to news reports.

The commission, in a separate investigation, also is looking at the duration of contracts between a number of Hollywood studios and one pay-TV company, Torres said. She would not name that TV company.

The commission conducted raids on some European pay-TV companies several weeks ago.

A spokesman for BskyB in London said it was among the pay-TV companies contacted.

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