Sky Under Pressure From Advertisers And Broadcasters
Major advertisers could ask for refunds on deals agreed with BSkyB after the broadcaster’s channels were removed from the Virgin Media cable service.
Speaking to the Sunday Telegraph, Starcom trading director Chris Locke said: “Sky has taken a strategic business decision to land grab Virgin Media’s customers and that has resulted in a loss of audience, which is unacceptable to us on behalf of our clients.
“For the second half of this year we will review where those viewers have gone and move our money accordingly.”
According to the Sunday Telegraph, Sky has lost 3.3 million customers who watched the basic channels on the Virgin Media cable service, which will result in a 10% decline in audience share.
However, Sky has now asked advertisers to wait until its finanical year ends in June before considering the renegotiation of any deals.
In addition to the threat from advertisers, Sky is facing opposition from television broadcasters to its plan to take its free channels from Freeview later in the year (see New Sky Service To Lure Consumers From Free TV).
The broadcasters, which include the BBC, ITV and Channel 4, are all set to begin lobbying Ofcom over Sky’s plans to remove Sky News, Sky Sports news and Sky three from Freeview.
Sky intends to replace the channels with four pay-to-view channels. However, to do so it will need to get the go-ahead for the move from Ofcom.
The regulator has already launched a consultation on the Sky proposals, expressing concerns that the service might “unacceptably diminish the appeal” of the Freeview platform (see Sky’s New DTT Proposal Could Damage Freeview).
This double whammy comes as Virgin Media prepares its legal team for a courtroom battle, with the cable broadcaster saying that it will sue the satellite giant if the carriage dispute is not dealt with within the next 16 days (see Virgin Media Threatens Legal Action Over Sky Channel Dispute).
James Murdoch might well be feeling a little beleaguered at the moment, especially as Ofcom and the Office of Fair Trading are carrying out separate investigations into the deal which saw it acquire an 18% stake in ITV and arguably sparked the current war with Virgin Media (see Grade Says ITV Lacks Innovation As Profits Decline).
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