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Netflix may have to swim upstream in Europe's pay TV market

LONDON — Netflix may find itself boxed out of the most coveted content in Europe's $76 billion pay TV market.

In Britain, a deal with broadcaster ITV Plc probably won't include the most recent episodes of successful shows such as Downton Abbey, a person with knowledge of the matter said, asking not to be named by Bloomberg News because the talks are confidential.

An agreement with the British Broadcasting Corp. last week allows Netflix to offer shows such as Top Gear, but only six months after the broadcaster has aired them.

Netflix's early entry in the U.S. market helped it become the biggest video-streaming service, even spurring premium channels HBO and Showtime to offer shows online. In Europe, the video-streaming service will have to wrest digital rights away from a cabal of powerful broadcasters who own most of the popular content and have their own streaming services.

"Broadcasters are controlling a lot of the premium, online, video-on-demand business" in Britain, said Rio Caraeff, chief executive officer of Vevo, a video-streaming company backed by Vivendi's Universal Music and Sony. "They're able to protect their television business by packaging it with their online business."

Netflix, whose biggest investors include Vanguard Group, JAT Capital Management and Morgan Stanley, plans to begin its British service in "early" 2012. Local consumers can already choose from video-streaming services by's Lovefilm unit, Ch. 4, the BBC, British Sky Broadcasting Group and ITV, the country's biggest commercial broadcaster.

Netflix has deals with Lions Gate Entertainment and Metro-Goldwyn-Mayer Studios to be the exclusive streaming provider in Britain and Ireland. The British service will also stream Miramax films such as Pulp Fiction.

In Spain, talks between Netflix and Antena 3 de Television and other local media companies ended this year without a deal as Netflix decided to focus on Britain and Ireland, said Francisco Sierra, a multimedia executive for the Spanish broadcaster.

Netflix may have to swim upstream in Europe's pay TV market 12/24/11 [Last modified: Saturday, December 24, 2011 3:31am]
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