Opinion
Broadcaster focus The consolidation game
Ever since Rupert Murdoch (pictured) rushed Sky onto air in 1989, he’s held tight to News Corp’s controlling stake in the broadcasting giant, while, over time, others have sold out. And now, in a move that’s been rumoured for some time, News Corp has finally made its bid for total control of Sky. It may take up to a year to finalise, but with a soothing first reaction from Culture Secretary Jeremy Hunt, the move is unlikely to face Government opposition. The move is testimony to both News Corp’s strong global spread and
BSkyB’s recession proof positioning. Profits before tax are due to rise to almost £1bn by 2011, on income approaching £6bn. It’s close to hitting the tough target of 10 million subscribers set eight years ago, with each home paying in excess of £500 a year. High definition on 40 channels is adding growth, while 3d is adding some marketing chatter. The downside from the UK perspective is that this well run company will no longer report here. Nor is it contemplating infrastructure investments to match its big bet on digital, which was back in 1997/98. Added to Murdoch’s move is the potentially very interesting deal
between former combatants BSkyB and Virgin Media, which has also been a year in the cooking. It will see BSkyB gaining ownership of the Virgin television channels. And this addresses a weak area of BSkyB’s overall portfolio; the audience
share for its range of wholly owned channels. Currently this is modest at around seven per cent, while Virgin Media TV’s Virgin 1, Living, Bravo, Challenge and related repeats channels together attract a 2.7 per cent share. So, combined with Sky’s existing wholly owned channels, the
broadcaster will have an audience share of just under 10 per cent, putting it in a position to chase Channel 4. Meanwhile, Living will plug Sky’s failure to appeal to young women. Sky’s move to aquire Virgin’s channels also boosts subscription income, as under a linked supply deal it will make much more of the premium programming available to Virgin cable customers. We’re seeing a pragmatic alliance of pay TV operators, who together service more than half all UK homes. Freeview should tremble. On the advertising front, the prospects are also favourable. A year ago BSkyB had a 14 per cent share of net revenue. It added sales for Viacom in January and gains a further 3.5 per cent from the VMTV channels sales house, IDS. That’s a solid 19.5 per cent total, which is a considerable amount of jam on top of the bread and butter of subsciptions, and within waving distance of Channel 4’s 24.5 per cent. Sticking with the purely domestic, you can see how ITV plc as well as Channel 4 are being drawn into the consolidation dance. And the haggling over Five is progressing as I write. The issue for David Abraham and Adam Crozier is the same: are you going to be the prey, or the aggressor?
Virgin’s TV channels have been snapped up by Sky and the future of C4, ITV and Five is uncertain, as Maggie Brown reports
MAGGIE BROWN Industry journalist Maggie Brown was a founder journalist on The Independent and is the author of A Licence to be Different - The Story of Channel 4. She writes regularly for the Guardian’s media section, is a columnist for The Stage, and writes for a range of other publications.
in my view Summer 2010 theproducer 7
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