European regulators have approved a movies-on-demand joint venture between Sony's Columbia Pictures and Walt Disney Co. that could help U.K. cable companies fight off Britain's dominant pay-TV firm, B

BRUSSELS/LONDON (Reuters)-European regulators have approved a movies-on-demand joint venture between Sony's Columbia Pictures and Walt Disney Co. that could help U.K. cable companies fight off Britain's dominant pay-TV firm, BSkyB.

The MovieCo joint venture will offer films to customers of Britain and Ireland's two biggest cable companies, Telewest and NTL.

It could also improve Hollywood's leverage with BSkyB, a satellite TV company, as it renegotiates with individual studios over the rights to films for its stable of movie channels. Sky offers its movie channels to cable customers as well as its own satellite subscribers.

Video-on-demand (VOD), which allows viewers to pick from a wide selection of movies to watch when they choose, is expected to be a key weapon for cable and telecommunications providers in their battle against satellite firms.

VOD "is a competitive advantage over Sky," said Telewest COO Eric Tveter. In addition to the MovieCo offering, Telewest plans to offer seven-day "catch-up" programming and other content in the first half of 2005.

Companies that include BT Group and France Telecom's Wanadoo also have VOD platforms in the works. Video Networks' HomeChoice already offers VOD to a small group of U.K. subscribers.

A spokeswoman for Disney declined to comment; officials for Columbia Pictures and U.K.-based ON Demand Group, a third partner in the venture, were not available for comment.

About 55% of U.K. households received digital TV by the end of June, with BSkyB present in more than half those homes. NTL and Telewest together represent about 18% of the market, with Freeview -- a service with no subscription fee that has grown rapidly -- claiming another 28%.

Additional reporting by David Lawsky in Brussels and Adam Pasick in London