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EC approves acquisition of Sky-D & Sky Italia by BSkyB

The European Commission has authorised under the EU Merger Regulation the proposed acquisition of Sky Deutschland AG and Sky Italia S.r.l. by BSkyB. All three companies are media companies, active primarily in the pay-TV sector. Sky Deutschland and Sky Italia are currently owned by 21st Century Fox of the US. The Commission concluded that the transaction would not raise competition concerns, since the activities of the three companies are geographically complementary.

The Commission’s investigation showed that the geographic scope of the markets for the licensing or acquisition of audio-visual programming for free to air (FTA) and for pay-TV, the wholesale supply of TV channels for free to air (FTA) and for pay-TV, the retailing of audio-visual programming (free to air (FTA) and pay-TV) to consumers and the sale of TV advertising airtime is national or along linguistically homogeneous areas. The Commission found that the transaction would not lead to any material overlaps in the parties’ activities, as they are mainly active in different national markets. BSkyB’s activities are mainly focused in the UK and Ireland, Sky Deutschland’s activities are mainly focused in Germany and Austria and Sky Italia’s activities are mainly focused in Italy.

The transaction brings together the leading pay-TV operators in the UK, Ireland, Germany, Austria and Italy. Therefore, the Commission also assessed whether the merged entity would enjoy increased bargaining power vis-à-vis rights holders for the acquisition of rights to audio-visual content – in particular “premium” content (i.e. certain sport events and films) – or for the acquisition of pay TV channels for its pay TV programmes, to the detriment of its pay TV competitors.

The Commission found that it was unlikely that the merged company would be able to impose a change from current licensing practices, which are focused on national territories or language areas, towards the joint purchase or simultaneous negotiations for premium content across several countries. First, there are practical obstacles, such as different timelines for the negotiations of certain rights licensing. Second, rights holders would not deviate from their current preferred model of licensing, unless it is in their interest in terms of maximising revenues. The Commission notes that although there are already a number of broadcasters that operate across various territories in the European Economic Area (EEA), rights holders have not accepted the practice of multi-territorial licensing to any meaningful extent. Finally, even assuming that rights owners were to license rights on a pan-European basis, the merged entity would in any event face competition for multi-territory rights from a number of multinational groups which already operate in the EEA.

The Commission therefore concluded that the transaction would raise no competition concerns.

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