BBC enters in strategic deal with Sky
BBC has entered in a strategic alliance with Sky. The details of the network deal states that BBC pays for the satellite broadcaster around tens of millions of pounds each and every year for availing the exclusive network privilege of being included in the Sky electronic programme guide (EPG). The broadcasting alliance has enabled BBC to promote their channels through the Sky satellite bandwidth. Sky happens to be increasing in the number of UK homes. The dilemma occurs when the statistics reveal that each Sky user pays £30+ per month to receive the broadcasting channels, so why is the BBC also willing to pay to be broadcasted?
On further inspection, this looks like a traditional case of double dipping. The impressive move by Sky in negotiating this deal with the BBC has been supplied with the license fee. This has improvised the public owned, consumers should not have to pay more than twice the amount for the same broadcasting content.
How’s BBC playing it out –
In the United States, Fox Networks that’s owned by Murdoch charges their cable companies in order to rebroadcast its priority content in various deals that are the absolutely opposite of the UK situation – so why is it that in the UK the BBC is paying Sky, not Sky paying the BBC? Part of it is to do with Sky being broadcast by satellite which means that it is available to even the furthest flung areas of the UK – places where BBC content should be available, but may not have been through traditional television masts, analogue or digital. Therefore, when Sky was launching Sky Digital and could offer this service, the BBC was almost obliged to be on the service giving Sky the better hand in negotiations. This situation has, however, changed.
Whilst Sky was the first digital satellite television service in the UK, and should be respected for pioneering that market and the pay-TV market in general – there is now a competitor in FreeSat. FreeSat is a digital satellite service from the BBC and ITV and runs on the same satellite service as the Sky service – meaning that everywhere that Sky reached that terrestrial television and Freeview could not, can now be reached by this service – and it is already part-owned by the BBC. The BBC, then, no longer needs to be available on Sky to reach the whole British population – something which should change the balance of power in the upcoming renegotiation on the deal.
Renegotiation of BBC – Sky Deal
The BBC still produces the most watched television content in the UK, and as such should be holding most the cards in renegotiating with Sky. Whilst commercial broadcasters like ITV may need to worry about any temporary loss in viewership (and therefore advertising viewers) by holding the Sky rebroadcasting deal to ransom – the BBC is paid by the license fee and as leaving the Sky EPG for a few days to show their strength of hand is an option. The volume of complaints Sky would receive if it no longer was able to show BBC content on its service would have the company changing tack and offering to stream the BBC content for free or even pay for doing so quite quickly. The BBC just needs to show its teeth.
The BBC deal is currently being renegotiated by the Culture Secretary Jeremy Hunt in the coming days.