BRITAIN'S biggest provider of paid-for television could lose its stranglehold on the rights for premium pay-TV movies after a watchdog said BSkyB enjoyed too much exclusive control over Hollywood films.

The Competition Commission said the satellite broadcaster’s large subscriber base and its contracts with the six major Hollywood studios gave it an advantage that meant potential rivals, including BT and Virgin Media, found it difficult to bid successfully for the rights to first-run Hollywood movies.

This, in turn, meant viewers found little alternative to Sky Movies for new blockbuster films, it said.

The announcement is a further blow to the broadcaster struggling to placate investors after Rupert Murdoch’s embattled News Corp withdrew its bid to take full control of BSkyB amid public anger about phone hacking allegations aimed at the now closed News of the World.

The group, which is 39% owned by News Corp, has exclusive deals with six of Hollywood’s biggest studios – including Universal, Disney, 20th Century Fox, Warner Bros and Dreamworks – for the first subscription pay window for televised movies.

One-third of the UK’s 15,000,000 pay-TV households subscribe to Sky Movies whose new and “coming soon” movies include Shrek Forever After, Inception, The Social Network, Tron Legacy and Sex and the City 2. The industry watchdog said the prices charged by Sky to Virgin were too high, meaning Virgin could not make a business selling movies to its customers. Sky has twice as many pay-TV subscribers as all its rivals combined.

Possible changes include restricting the number of studios from which Sky could obtain first rights, restricting the nature of those rights, or forcing Sky to offer rival movie channels to its subscribers.

Media analyst Patrick Yau from Peel Hunt said the outcome may be similar to the widening of rights to show Premiership football, put in place last April. “Movies and sport are the key reasons subscribers come to Sky, so this will be a blow to the business,” he said.

Competition Commission chairman Laura Carstensen said: “Sky has had control of recent movie content on pay TV for many years. At the heart of the problem is Sky’s strong position in the pay-TV market, with twice as many subscribers to pay TV as all other traditional pay-TV retailers put together.

“This provides Sky with a great advantage when it comes to bidding for movie rights, which no rival bidder has yet been able to overcome.”

Director of Sky Movies, Ian Lewis, said he did not believe there was a need to intervene. “Consumers are very well served by a growing number of providers and Sky Movies is just one of the many ways they can choose to watch movies at home.

“It makes no sense to think that Sky Movies is somehow protected from the forces of competition,” he said.

“Sky has multiple competitors who offer a wide range of movies either before or at the same time as us. Consumers have never benefited from so much choice and innovation.”

Neil Berkett, chief executive of Virgin Media, said: “We’re pleased the Competition Commission has provisionally recognised that consumers have suffered significant harm from Sky’s stranglehold and are paying far too much to watch films at home.”

Last year, a review into the pay-TV market by telecoms regulator Ofcom forced BskyB to lower the prices it charges rivals for showing sports events. The regulator was also worried about the premium pay-TV movie market but passed its inquiry on to the Competition Commission as it said it did not have the power to address its concerns.

The final deadline for the report is August 3 next year, but the commission said it expects to make its final ruling before that date.