Irish Times "Sky beats NTL for control of Irish and British pay-TV market"

DMC

No ireland.com account, so I cant link to it, its on page 3 of the business section today.

But there is the opportunity to post in a vote on the topic online ..... http://www.ireland.com/business/

"Can chorus and ntl meet the challenge from BSkyB, now that it has secured rights to the Premiership for another three years?"

..... which induced this responce from me.....

There are some facts that need to be cleared up, in relation to Jamie Smyth's article today.
NTL and Chorus are service providers, but Sky are also service providers AND content producers. Sky have agreements with the cable companies to provide channels like Sky Sports 1,2 and 3, Sky One, Sky News etc. So NTL and Chorus cant be seen as losing anything, as the Premiership will still be shown on Sky Sports on their platforms. However, how much Sky want for the carriage for the channels on NTL and Chorus in the future may change, as they see about how to pay for their £1 billion + outlay for the football.

Also, another misconception that can be regularly seen on the pages of the Irish Times, is the BBC's recent decision to go Free-to-air. Jamie says that "(the BBC) offers its channels free on another satellite service" This is wrong. There is no other service. What has happened is the BBC have decided not to pay Sky to encrypt its channels on the Sky Digital platform any longer, therefore, broadcasting in the clear. This can be received by existing Sky Digital subscribers, and people who have a satellite receiver that doesn't require a subscription. The other factor is that the BBC moved their broadcasts from one Astra (2A) satellite at 28 Degrees East, to another one (2D), with a narrower beam into Europe, that only really covered the UK and Ireland. Its not a separate service, they have just parked their car in another spot in the same car park.

Sky's greatest chance of continued growth here is the fact that they do not have UTV or Channel 4 to offer. The cable co's continue to harp on at this fact in their advertising. A lot of people have Sky and cable, and they only keep their cable so they can continue to watch these channels. Channel 4, I cant understand why they are not, E4 and FilmFour are on Sky Digital here already, but UTV may be blocked by Granada, being in the dominant player in ITV and major shareholder in TV3, as so much of TV3's prime time programming is also aired on UTV . Although UTV are itching to get on Sky Digital in the Republic, there is no chance while TV3 is owned by Granada. Maybe, if UTV, along with the rest of ITV, opt to follow the BBC's lead and leave Sky's encryption, that we will be able to get UTV on Sky Digital.

ShaneOC

Sky beats NTL for control of Irish and British pay-TV market

With bumper results and a three-year exclusive Premier League deal, it's no wonder Sky takes the honours from NTL, writes Jamie Smyth, Technology Reporter

A bitter and bloody five-year battle for control of the Irish and British pay-TV market ended this week, with Sky Television taking the honours from its rival NTL.

Sky's holding company, BSkyB, once again impressed City analysts by beating forecasts, adding new subscribers and reporting a £260 million sterling (€370 million) annual profit - the firm's first since 1998.

Fresh from announcing that Sky would soon meet its target of attracting seven million users, BSkyB chief executive, Mr Tony Ball, set a new goal of eight million users by 2005.

With these bumper results and a new three-year exclusive deal with the Premier League under its belt, Mr Ball can afford to take a longer August break than usual.

In contrast, cable firm NTL said this week that its co-founder and chief executive, Mr Barclay Knapp, was stepping down and it was seeking new financing to cut interest payments on its debts.

Despite its £11 billion refinancing earlier this year, NTL still has debt of $6 billion (€5.3 billion), three times its annual revenues.

In Britain, Sky has signed up more than 6.5 million pay-TV customers - double the number of subscribers of its main cable rivals, Telewest and NTL.

This has persuaded most City analysts that Sky has won the early battle to build a strong subscriber base, if not the entire war.

"I think it will take a very long time for the cable firms to get in a financial position to compete with Sky," says Mr Paul Richards, analyst at the London-based firm Numis. "Cable firms must develop a product offering to compete against Sky's product and improve customer service."

In the Republic, which has a much higher penetration of cable television than Britain, Sky recently overtook Chorus as the second-biggest pay-TV operator.

It is also eating into NTL's subscriber base, which declined by 3,000 during the past quarter and is forecast by the firm to drop a further 15,000 this year due to a tough new NTL credit policy.

In 1998, BSkyB had just 80,000 Irish subscribers to its analogue satellite service. This week it said it had notched up a further 7,000 subscribers in the past quarter, bringing its total subscriber base to about 286,000. Sky also has the largest circulation in the State for its free TV magazine.

Sky's high average revenue per user figure of about €500, which is about double that of both Chorus and NTL, demonstrates the strength of its Irish operation, which adds about €142 million a year to BSkyB's balance sheet.

The cost of acquiring new customers - through subsidising set-top boxes and installation - is falling for Sky, down during the year from £234 to £207. This is helping the firm reduce its costs and boost its profit margin.

One reason that BSkyB has been able to attract customers from its cable rivals is because of technological weaknesses in their pay-TV platforms, says Mr Darragh Stokes, director of Hardiman Telecommunications.

Both NTL and Chorus supplied pay-TV services to thousands of their customers using a microwave technology platform called MMDS. This tends to be more susceptible to interference in bad weather and has far less capacity for extra channels than Sky's satellite, says Mr Stokes.

"It was a 'no brainer' for people getting their pay TV on MMDS to switch to Sky, which offered digital television and hundreds of channels," he says.

In fact, Sky's strong growth in the market has catapulted the Republic to second in the European league table for digital TV, behind Britain. NTL and Chorus have both reacted by offering digital TV packages.

The fact that Sky's growth has slowed in the past few quarters demonstrates market maturity in the Republic rather than competition from cable, says Mr Stokes.

Mr Graham Sutherland, NTL Ireland's managing director, says NTL is not losing customers to Sky anymore and is migrating its customers to digital TV.

The company is planning to upgrade its cable to 140,000 homes by the end of 2004 to be able to offer high-speed internet access, he says.

But this will require heavy investment by NTL's parent, which faces $6 billion in debts.

The firm will also have to reassess its strategy in the telephony market, which it pulled out of last year.

Sky has expanded into these types of service in Britain, while remaining solely focused on interactive television in the Republic.

Facing a saturated pay-TV market, Sky will face a tougher challenge over the next few years to grow, acknowledges Mr Mark Deering, director of Sky Ireland.

But he says the acquisition of television rights for the Premier League and this season's European Champions League should help to attract new subscribers.

Cable companies such as NTL and Chorus can also show Sky's sports channels But they must pay Sky for the sports content.

Despite intervention by the European Commission to force the Premier League to sell separate rights packages, Sky won the exclusive television rights for three years from 2004/5. The deal will enable Sky to broadcast 138 live games, 32 more than the last deal and at a cheaper price.

Numis analyst Mr Richards says the new football deal is an excellent one for BSkyB and although the European Commission's approval cannot be taken for granted, it should go ahead.

Ms Fiona Scott, managing director of the Dublin-based advertising agency MCM Communications, agrees that Sky's big attraction is the premiership.

"I would say that Sky's customer base is made up of young people attracted by the football. . . maybe middle to lower classes," says Ms Scott, who adds that most of Sky's revenues are generated by subscriber fees rather than advertising on its channels.

Perhaps, the greatest threat to Sky's growth in the Republic and in Britain is the BBC's recent decision to offer its channels free on another satellite service.

In fact, people with a satellite dish and set-top box can now receive up to 90 free channels without having to pay any subscription fees. If other terrestrial broadcasters such as ITV, Channel 4 or RTÉ decided to provide their channels free on a new satellite platform, people may be lured away from pay TV, says Mr Stokes.

But for the time being at least, Sky looks well set to increase its penetration into the Irish market. Its strong balance sheet, superior technology and ownership of football rights have helped it win the first pay-TV battle. The next decade will decide whether it will win the war.




© The Irish Times

DMC

Thanks for that, Shane, puts meat on my words

ShaneOC

Originally posted by DMC
Thanks for that, Shane, puts meat on my words

with Spuds and two veg

It is amazing that nobody can ever get in contact with Mark Deering. I am beginning to think that he is a figment of some journalists' imaginations.

sceptre

Originally written by Jamie Smyth
maybe middle to lower classes," says Ms Scott

That covers everyone in the country except the 20 members of the fox-hunting brigade descended from brief trysts in the broom cupboard between scullery maids and royalty.

Unless she's bemoaning the satellite dishes on council estates.

I'll leave out my usual "why doesn't Jamie Smyth know anything at all about technology" bit.

watty

Free to air BBC and ITV rather than Free to view (needing Digibox) is a threat to Sky perhaps in UK but not here.

If ITV was FTA tomorrow, it would not much hurt Sky in ROI, but seriously damage MMDS sales.

I said when Sky started Digital and original irish DTT was mooted that NTL / Chorus had a 6month window to get the "digital house in order"

Chorus / NTL actually have had a couple of years not six months because:

1) ITV / C4 not on Sky yet to ROI

2) Irish DTT was stillborn.

Basic Cheap Cable, esp in apartments and areas of Landlords etc will survive but more expensive Cable and rural and outer suberbia Chorus / NTL will be doomed when ITV goes FTA.

ITV will be FTA barring acts of God.

Five will become a Sky pay channel and thus likely in ROI also.

Neither Sky nor C4 nor anyone else seem to know what C4 is doing.


The BBC / ITV is not an alternative platform since the Interactive/Text only works on Sky, and Sky can still offer a install, box (all owned by user from Day 1) and a YEARs sub to Pay channels all at same price as a FTA satellite receiver.

The FTA satellite receiver needs installed (DIY or pay extra)

Granny won't be able to retune channels or add new transponders on a FTA box. The Sky box does it automatically.

A FTA box is great for the Watty's Carrols, ShaneOC's and TVDxs of the country, but for a typical TV viewer the same amount of money put into a Digibox is better value.

Sky will be banking on fact that a small proportion will actually cancel after the first year.

Esp. since ex NTL/Chorus customers are greatly puzzelled by discovery there are free channels and you own all the gear.

eigrod

with SKY becoming the dominant player in this and given the money they have invested in Prem football over the next 4 years, are us SKY subscribers likely to face a hefty hike in subscription in the coming years ?