Hollywood studios refuse BSkyB pay-per-view rights

Two giant Hollywood studios, Disney and MCA, have refused to sign exclusive pay-per-view movie deals with Rupert Murdoch's BSkyB. The move will further threaten BSkyB's efforts to dominate the PPV market in the UK in the age of digital television.

Late last month, The Independent reported that Warner Brothers, makers of the Batman films, had also declined to reach an exclusive deal with Sky. The studios, with the exception of Mr Murdoch's Fox, are intent on supplying their movies on a pay-as-you-watch basis to any distribution platform - satellite, cable or digital terrestrial.

Confirming the commitment to non-exclusivity, a Disney spokesperson said: "It is our policy in all our markets to offer pay-per-view rights to broadcasters on a non-exclusive basis. You can take it as read that the policy holds for the UK."

Disney recently reached a pay-movie rights deal with Telepiu, the Italian pay-TV broadcaster. It will get exclusive rights for subscription television in Italy for 10 years but only non-exclusive rights for PPV.

The main studios are eager to encourage the development of rival services for PPV films, which are sold on a so-called "transactional" basis. Unlike subscription deals, for which broadcasters pay a negotiated price for the right to show movies, PPV revenues are shared between the studio and the broadcaster.

BSkyB had hoped to offer a PPV movie service exclusively to customers who already take its two main subscription movie channels, Sky Movies and the Movie Channel. By using the "buy-through" approach, the company had hoped to safeguard its existing premium subscription movie business, even as it introduces pay-per-view. BSkyB's current Hollywood movie rights for standard subscription involve all the large studios, and run until the end of the decade.

Its digital plans called for as many as 60 channels to be set aside for pay-per-view services, out of a planned total of at least 150. Customers would have to buy a new set-top box to receive the digital service, which had originally been planned for late 1997. PPV viewers would pay pounds 2-pounds 3 per movie.

Cable operators expressed delight at the approach being following by the studios. Several cable companies, led by Telewest and Cable & Wireless Communications, the newly formed industry leader, are negotiating for the rights to start a PPV movie service on cable by the end of next year, using new digital set-top boxes which customers will be able to lease. They intend to offer their customers the ability to buy viewing rights to films even if they do not subscribe to the premium movie channels.

BSkyB's stranglehold on the pay-television market has been controversial, and cable companies have loudly complained about the terms under which Sky's movie, sport and niche channels are offered on a wholesale basis to cable operators, for distribution to retail cable customers.

"Why should we pay a middle man?" one cable executive said late last week, vowing to ensure that BSkyB's near monopoly in the analogue market did not extend to the digital age.