Will BSkyB turn the screw on UPC Ireland too?
Wednesday, February 28th, 2007There’s been an interesting squabble going on amongst the British media giants lately (excellent Q and A here), with Sky Digital and Virgin Media (formerly NTL/Telewest and Virgin Mobile) at loggerheads over a new carriage contract between the two.
Basically, the deal that allows Virgin to carry BSkyB’s basic channels (such as Sky News and Sky One) is about to end and the two companies have failed to reach a new agreement.
Virgin claim BSkyB are purposely trying to hinder their offerings (and have asked for twice as much as before) and have no intention of making a deal. On the other hand Sky have said they’re still up for negotiations but Virgin have left the table, something that they’ve said will now impact on their bottom line.
What makes it more interesting is that Virgin have claimed that BSkyB already has an ad campaign lined up to take advantage of Virgin’s lack of the channels, in an attempt to force them into a corner and lure their customers over as a result.
If this can be believed it would seem that Sky have made a swift retort to the recent formation of Virgin Media. While a loss of the deal will lose them millions a year, they may well see it as more favorable than allowing a company like Virgin to become a serious contender in new and existing entertainment markets, as it is shaping up to do. By cutting out some of the best bits that Virgin has to offer, it could make them a non-starter in the consumer arms race. And we know Sky are happy to spend big to limit the company’s aspirations - they’ve done it already quite recently.
Sky Digital has been, by a small margin, the minority player in the Irish digital TV market since the owner of Chorus completed its purchase of NTL Ireland in late 2005. After a year and a bit those two players are all but ready to merge completely, becoming UPC Ireland. Along with this re-brand, the company is likely to put more emphasis on its oft neglected broadband service as well as its VoIP offerings - HD and IPTV is likely to be part of their long-term game plan, no doubt, too.
Just like Virgin, UPC find themselves in a position where some of their more popular channels are run by their digital rivals and losing them isn’t something they’d like to see happen (who doesn’t remember the great Simpsons famine of ‘92-’94?).
But with a formerly lame duck player now getting itself together (with massive investment from above), might Sky be tempted to pull the same trick to snuff out a re-emerging threat which will block their attempts to gain Irish market dominance?
The difference is, of course, that Sky would have a lot more to lose than UPC if the did so. The reason why the loss of Sky One is such a big deal for Virgin Media viewers is because the channel had been snapping up a healthy share of exclusive programming recently, including stupidly-popular shows like Lost and 24. Viewers in the UK without Sky One would be waiting on other channels to play catch up months later and it could make some consider a switch in provider.
Ireland is different, of course. As viewers here know, we’re in a fairly position where Irish channels like RTÉ, TV3 and now even Channel 6 tend to snap up rights to huge US shows which then air at the same time as in Britain on their channels. In fact, to remain competitive in a multi-channel market, the indigineous players tend to get out of the gate ahead of the BBC, UTV, Channel 4 and Sky etc., allowing Irish viewers to catch big-draw programming weeks, sometimes months before their British counterparts.
In other words, the loss of Sky One would be of little consequence to Irish viewers - certainly less than it is to British ones. The only things UPC viewers would miss is Sky-made programming like Project Catwalk and new Simpsons episodes, and neither of those are in nearly as much demand as they used to be or as Sky would like them to be.
My bet is Sky will play nice with their rival when it comes to channel contracts - they have no other choice really. That said, don’t expect them to sit by and watch a reinvigorated cable operator assert itself with a fresh mindset, new services and, one may live in hope, better customer services.
Blogs elsewhere
March 1st, 2007 at 10:23 am
They’ll play nice, but only because Sky/Murdoch have no political objectives in Ireland. The debate with Virgin is part of a longer-term process which aims to ensure that Murdoch has a secure platform (Sky Digital) for the advancement of his interests.
March 1st, 2007 at 11:57 pm
Sky One/Sky News can be replaced, as you point out, but I am surprised you didn’t factor in the attraction of Skys Sports, specifically the exclusive content it carries.
There are many who would instantly switch to a Sky dish if they couldn’t get their fix of premium sports via UPC.
March 2nd, 2007 at 1:07 am
Sky One/Sky News can be replaced, as you point out, but I am surprised you didn’t factor in the attraction of Skys Sports, specifically the exclusive content it carries.
There are many who would instantly switch to a Sky dish if they couldn’t get their fix of premium sports via UPC.
Fair point, the loss of Sky Movies and Sky Sports would have an impact on UPC and is something Sky could use to their advantage when the next contract comes up, however I don’t think the loss of them would be a death knell either…
Firstly, UPC Digital Basic + Sky Movies and/or Sky Sports costs more than Sky Digital Basic + Sky Movies and/or Sky Sports, so bar the few who refuse to actually do the math, the majority of people who want Sky Sports/Movies are already with Sky Digital… UPC Digital only makes financial sense as a basic package, when compared to Sky’s basic package it’s far cheaper.
- As time goes by I understand that UPC hope to keep customers with their multiplay offerings - so while the digital might be a little dearer, within the entire digital/BB/VoIP package it’s far cheaper (than Sky Digital World, BT Broadband and phone with line rental etc.)… but at the moment their Broadband offerings are thin on the ground and their VoIP is only a newborn!
Secondly, with Setanta grabbing half of next season’s English Premiership Soccer and the likes of FilmFour becoming FTA, the clout of Sky Sports and Sky Movies has lessened somewhat. Sure - they’re both still the bigger players in their respective fields, but their USP has been hacked away somewhat.
With all that said, yes, the threat of Sky Sports & Movies being cut off is a grave one for UPC, and perhaps we’ll see Sky take advantage of that - even if it isn’t to the same extent as with Virgin in the UK.
March 17th, 2007 at 4:48 pm
There’s a simple reason Sky would at the moment be fools to start fighting with UPC - Branson would go straight to Offcom using it to show that the fight between Virgin and Sky is the fault of the latter being forceful etc.
November 1st, 2007 at 11:55 am
Thanks a lot for this article
September 7th, 2008 at 6:36 pm
Well almost one year passed so how it ended up ?