Sky shows off dish free offer as clouds rumble
Rupert Murdoch's target has reported falling profits and a high level of customer churn
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Your support makes all the difference.For years the satellite dish has been the calling card of BSkyB, and now Sky.
Not any more. The big news coming out of Sky’s latest results is that the dish is done.
That’s not how Sky will portray it. But later this year the company will roll out its full TV service over broadband.
It’s not just that competitors ranging from Netflix, to BT, to Amazon, are snapping at its heels. It’s the change in viewing habits they have wrought. Binge watching over broadband is in.
Sky, which has already been offering a limited internet-only pay-as-you-go service through its Now TV offshoot, is probably bowing to the inevitable here.
The news also helped divert some attention from the numbers contained in the results that the company, which remains the subject of a takeover bid from Rupert Murdoch’s Fox, has just unveiled.
Sky did its best to put a good spin on them. “Sector leading revenue growth across all markets, faster customer growth,” it declared. True, true.
But while a six per cent rise in sales at constant currency to £6.4bn isn’t to be sniffed at, customer churn also rose, to 11.6 per cent in the six months to 31 December from 10.2 a year earlier. The latest figure is the highest it has been at in five years.
Sky is bringing them in at a good clip, but they’re also leaving at a good clip. Might a dish free deal tempt some of them back, or speed the acquisition of new ones?
It’s a good idea to see if it will, and demonstrates Sky willingness to respond to consumer trends. But churn isn’t its only issue.
Profits fell by 12 per cent because of the increased cost of Premiership football, and the success of the blockbuster deal it signed to remain soccer's kingpin is still open to debate.
A midweek match between, say, Burnley and Swansea costs Sky north of £10m to screen despite limited interest outside those two fan bases.
A midweek Champions League match between, say, FC Basel and FC Red Bull Salzburg, which could conceivably occur in a future Champions League, also lacks glamour but Sky is battling to show it. It's in the mix to snatch back the rights from BT in the latest round of rights bidding.
The open question is whether subscribers will keep paying a premium price for content that can’t always justify the premium tag. Football was always going to hit a ceiling at some point. With so many other options open to people, has it reached it?
None of this will worry Mr Murdoch, or James Murdoch, the architect of Sky's proposed takeover. They should be able to use it to put down any objections from the regulators this time around. Just look at all that competition we face!
The deal is actually as much about what Sky can do for Fox back in the US as it is about the opportunities available to what is still a behemoth in the UK, and a growing force in Europe.
And the sun can still shine on Sky. It’s just that there are a lot more clouds than there once were.
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