BSkyB 'paying unfair cheap prices for its movies'

An independent film production studio has accused BSkyB of paying only a fifth of the price it would pay for the same film from one of the six largest Hollywood studios.

The unnamed film company made the allegation in a submission to the Competition Commission.

The watchdog has said Sky may be making "excess profits" on premium movie channels because of its dominant position. The commission said: "The studio told us that, under these circumstances, prices were not determined on the basis of the market value of the movie to the consumer, but were driven by Sky's buyer power.

"The studio said that it believed that the price Sky paid for its movies could be up to 80% less than the price Sky would pay for the same movie from one of the six largest Hollywood studios."

The watchdog is investigating whether the wholesale price that Sky charges rivals such as Virgin Media and BT for movie channels is too high.

Virgin said: "The Competition Commission has identified there's a real problem for consumers and the market needs this close scrutiny."

Sky says its prices are fair and points out the commission is not due to publish all its findings until April.

Regulator Ofcom ordered Sky to lower the wholesale price of Sky Sports 1 and 2 last year.