NEW YORK (TheStreet) -- Twenty-First Century Fox (FOXA) was dropping 2.79% to $32.53 after European Union regulators announced an investigation into deals between movie studios and pay television operators that preclude viewers in one European nation from watching a broadcast in another.
The European Union's antitrust officials said Monday that they have begun formal procedures to review licensing agreements between studios, including Twentieth Century Fox (which Twenty-First Century Fox (FOXA) owns), Warner Bros. (part of Time Warner, Inc. (TWX)), Sony (SNE) Pictures, NBCUniversal (owned by Comcast Corp.) and Paramount Pictures (owned by Viacom (VIA)). Three of Twenty-First Century Fox's pay television broadcasters - Sky Italia, Sky Deutscheland in Germany and BSkyB in the U.K. - are also under investigation, along with other pay TV broadcasters, including Canal Plus of France and DTS of Spain.
Studios often license valuable properties, including newly-released movies, to one pay TV broadcaster in one European country (sometimes more than one if the countries speak the same language) to give the big broadcasters "absolute territorial protection." This system means that said movies cannot be sent outside of the country where that broadcaster exists, even if would-be subscribers in other nations ask to receive a satellite signal.
The European Union regulations started a fact-finding investigation in 2012 and now want to dig further to determine if this system breaks rules that prevent any anti-competitive agreements.
TheStreet Ratings team rates TWENTY-FIRST CENTURY FOX INC as a Buy with a ratings score of B. The team has this to say about its recommendation: