Well, it’s time for another television related post which I hav’t done in a while…
Currently being slightly pushed aside by the TV-Phone in debarkle which is currently going on in the media, the Sky and Virgin Media War is still in full swing. Now, since the war kicked off Sky have lead a very good advertising campaign… but… it does seem it is pretty mis-leading to consumers, and so, here’s a short little back story on it all;
First thing’s first the main ‘war’ started back in late 2006 when 17.9% of the troubled broadcaster ITV was put up for sale. Richard Branson (then NTL Telewest) was in the running to purchase the portion of the channel, to in turn make them a more strong media company, and have more strength to compete against Sky (which is more powerful and worth more than Virgin Media). But, at the last minute, Murdoch jumps into the boat and pays for the 17.9% stake of ITV and without any further negotiations, leaves Branson left with nothing in the ITV sale.
Now, at the time this was seen as very controversal – is it really in the interest of the general consumer that ITV is now mainly controlled by Murdoch and his empire? It’s something Ofcom are looking into at this moment in time, but it wasn’t very fair to Branson and Virgin Media.
Onto the more recent news; and for a reason which still seems a little mistifying, Murdoch’s wish seems to be for every Sky channel to be exclusive to Sky, (unless you pay more for premium channels such as Sky Sports & Sky Movies). Yes, earlier this month, when Virgin Media’s contract with Sky to carry thier range of basic channels on thier platform (Sky One, Two, Three, Travel, Travel Plus, News & Sports News) was due to run out and be up for renewal. Now, unlike what would be expected, such as the same price (or even a slight increase in carrage fees), Sky decided to plan to charge Virgin a higher amount than had previously been charging to NTL Telewest (now Virgin Media). This price was never fully disclosed, however Virgin seemed to believe it was high, too high for them to pay, and in a cascading effect, what Virgin customers would have to had paid in thier increased montly bills, especially with recent trends of falling viewers on Sky’s channels.
So, with Sky not wishing to lower thier new fee’s and Virgin not wishing to pay them as they were seen as a ‘rip-off’ to the consumer, we were at a stand off. So, a week later, the Sky channels were removed from the Virgin Media lineup, much at first to the apparent joy of Sky who proceeded to advertise nationwide about how Virgin willingly removed the channels, and so to try to persuade customers to move to Sky from Virgin to ‘Get Jack Back’ and Not to ‘Lose Lost’.
That was then, this is now, and it seem’s as though the strategy failed to pay off to any substantial amount. According to both parties, only a small amount of people switched to Sky, nothing to get excited over, and now Sky in turn have lost out on 3.3 million potential viewers to it’s channels which now don’t have access to them on Virgin Media. It seems also that Sky’s decision is now further causing problems; as mentioned on the BBC News wesbite, now key advertisers such as Cadbury’s and Honda are wanted advertising refunds from Sky due to thier quick removal of the channels from the platform. To them, they had paid for thier adverts to be seen by a certain amount of viewers, which was in turn automatically reduced when Sky removed the channel’s viewers from Virgin Media, which in turn could cost them upto £20million to recover from.
Now, it isn’t fully all about Sky vs. Virgin Media. In February Sky announced plans to remove Sky’s channels from Freeview from early this summer, again losing a potential massive audience. Sky News has been flourishing since on Freeview and has been giving BBC News 24 a real run for it’s money. Sky Three (since replacing Sky Travel) has also been sucessful amongst viewers, and with the removal from Freeview, this will only hit thier viewing figures, and in turn advertising revenue hard. Thier new plan is to offer Sky programming for a price on the platform on Top-Up TV, but this move hasn’t been welcomed by other broadcasters such as the BBC, ITV (strangely) and Channel 4, and nevertheless, has to be approved by Ofcom in the next few weeks, who in turn may reject the plans.
So, is it all going to pay off for them? It does seem a little rocky at this moment. The whole Virgin Media debate doesn’t seem to have produced much for Sky, and because of Sky’s tactics in the whole matter, and how it seems as though from the start they were trying to make Virgin Media pull out of the contract by offering such a high deal, it does beg the question if Sky’s plan worked.
In many ways it doesn’t;
Not many people switched from Virgin Media to Sky, even though of thier expensive nationwide advertising campaign
Loss of a potential 3.3million viewers to the Sky channels, which inevitably will hit ratings hard
Advertising refunds from companies which could result in hefty payouts.
Sky’s aquisition of ITV late last year also seems to be on a knife edge as Ofcom along with the Office of Fair Trading look into the matter, and how thier plans for Freeview has to also go through Ofcom, many believe thier plans will be rejected.
We can only wait and see, but for sure, this won’t be the end of the Mudoch’s and Sky! With thier worldwide media corporation, they won’t be going anywhere too soon, but nevertheless, they can’t be in thier ideal situation right now.
