Sony and Walt Disney yesterday received regulatory approval from Brussels for a video-on-demand service that will compete with BSkyB's film channels.

The European commission has given the go-ahead to MovieCo, a joint venture between Sony's Columbia Pictures and Disney. The service is expected to start early next year on the NTL and Telewest cable platforms in Britain. MovieCo's owners declined to comment yesterday.

Video-on-demand channels deliver TV shows, films and sport to viewers' TV sets as soon as they are ordered. Sony and Disney films such as Spider-Man and Pirates of the Caribbean are expected to feature on the channel.

Both cable operators have had disputes with BSkyB over the terms on which they sell the pay-TV group's sports and film channels to cable subscribers. NTL and Telewest believe the deals for premium packages do not give them a wide enough profit margin. Analysts yesterday said the video-on-demand channel was not a serious competitive threat to BSkyB but might give the cable companies some leverage in negotiations over future premium package deals.

The commission said MovieCo "will give the UK cable network operators an alternative to procure video content other than BSkyB, which is currently the dominant player on this market ... to the benefit of cable customers in the two countries".

The closest BSkyB has to a video-on-demand service is Sky Box Office, which screens recent hits such as School of Rock every 15 minutes.