The European Commission has accepted and legally ratified proposals suggested by Paramount relating to the film studio’s insistence on geoblocking measures for certain services offered by UK pay-television broadcaster Sky – a move that could have repercussions for the sports media-rights industry.
Geoblocking prevents users in specified territories from accessing certain content online. Last year the EC announced plans to scrap the process, which is commonly used by sports properties that sell digital rights on a market-by-market basis.
Paramount’s association with Sky prevented the broadcaster from allowing its non-UK and Ireland customers in European Union countries from accessing films via satellite or online. Another clause dictated that broadcasters other than Sky be prevented from making their pay-television services available in the UK and Ireland.
The EC has now confirmed that Paramount has agreed to “neither act upon nor enforce these clauses in existing film licensing contracts for pay-TV with any broadcaster in the European Economic Area (EEA).” Paramount will also refrain from including such clauses in future film contracts.
Last July, the EC released a Statement of Objections, which outlined certain clauses in film licensing contracts between pay-television broadcasters and film studios that breached EU antitrust laws.
The EC felt the clauses restricted “the ability of broadcasters to accept unsolicited requests for their pay-television services from consumers located outside their licensed territory.”
Paramount in April responded to the statement and has detailed four commitments that it would adhere to. The first stated that, when licensing its film output for pay-television to a broadcaster in the EEA, Paramount would not (re)introduce contractual obligations that prevent or limit a broadcaster from responding to unsolicited requests from consumers within the EEA but outside of the broadcaster’s licensed territory. The proposal was referred to as the ‘No Broadcaster Obligation’.
Paramount also put forward the ‘No Paramount Obligation’, which states that broadcasters outside the licensed territory will not be subjected to contractual obligations that prohibit or limit them from responding to unsolicited requests from consumers with the licensed territory.
Thirdly, Paramount stated that it would not seek to take legal action against a violation of a ‘Broadcaster Obligation’ that exists in an existing licensing agreement. Paramount also said it would not act upon or enforce a ‘Paramount Obligation’ in an existing license agreement.
The EC agreed to make the four commitments legally binding under EU antitrust rules. The commitments will be valid for a five-year period and will apply throughout the EEA, covering pay-television services, as well as subscription video-on-demand services.
Both online and satellite broadcast services are covered by the commitment, which also include a non-circumvention clause, and clauses that include a review of the commitments and the appointment of a monitoring trustee.
The Commission also sent a Statement of Objections in July 2015 to five other film studios – Disney, NBCUniversal, Sony, Twentieth Century Fox and Warner Bros – and Sky. It set out the Commission's preliminary view that each of the studios and Sky have bilaterally agreed to put in place similar contractual restrictions in breach of EU antitrust rules. The Commission's investigation continues regarding the five other studios and Sky.