This morning’s decision by the European Court Of Justice in Luxembourg could derail the way that most independent films and TV shows are financed now and end the pre-selling territorial rights upfront. That’s because the court ruled that selling movie and TV rights country-by-country goes against the spirit of the single European market. It could also mean that Hollywood studios may only be able to sell Europe-wide pay-TV licences for movies, rather than striking deals with individual broadcasters. The ECJ said that this exclusive system of licences is “contrary to EU law” as the whole thrust of the European Union is to encourage the single market.

The European court also ruled that there is nothing to stop viewers from paying for cheaper pay-TV movie and sports channels beamed in from elsewhere in Europe. From now on, they will not have to pay BSkyB in the UK or Canal+ in France but could buy cheaper. “On the face of it, this is bad news for Big Content,” one TV analyst tells me. “The ruling means that restricting rights geographically is restraint of trade in single market. From this ruling, it would seem that, if someone wanted to use a foreign satellite decoder to watch a movie or TV series, and thereby bypass the local rights holder, there would be nothing to stop them.”

Today’s ruling comes because an English pub landlady fought UK pay-TV giant BSkyB and the soccer Premier League and won, after they tried stopping her from showing soccer matches on her premises using a Greek pay-TV decoder card. The Portsmouth woman, Karen Murphy, was fined for breaching UK copyright laws. But she appealed. And in 2008 the UK High Court referred the case to the ECJ. The fear now is that smaller broadcasters will be squeezed out if rights can only be licensed across Europe. Only the biggest players could afford to do this, destroying smaller and more local broadcasting markets. One European policy expert tells me: “This will be a black day for pay-TV since it effectively declares unlawful any agreement that would protect territorial exclusivity through preventing the sale and use of decoding hardware from another EU country. The business model for live sports rights is going to have to be significantly rethought.”