Sky high arrogance

Many people have blamed both sides in the dispute between BSkyB and Virgin Media, but over the last week or two it appears that Sky have launched a vendetta against their competitor.

First, to fill in the background: the two companies couldn’t agree on the price that Virgin pays Sky to show Sky’s “basic channels” (Sky One, Sky Three, Sky Sports News and Sky Travel). This resulted in the channels being withdrawn from Virgin’s cable TV service when the previous agreement expired at the end of February.

Now, Virgin Media customers who had signed up so that they could watch Sky One will understandably be angry. But to the outside observer, it’s surely Sky who are to blame for the situation. I know Virgin are not offering a reduction in price as a result, but they have said that customers wishing to leave won’t be held to any minimum contractual period, which seems fair enough.

It’s hard to know exactly what happened during the price negotiations. However, Virgin claim that Sky was asking for double the amount they had received previously. One other point that isn’t highlighted so much in reports is that, as part of the deal, Sky were insisting that customers on Virgin’s cheapest “Medium” TV package should no longer be able to receive their channels anyway. So any Virgin customers on that package would have lost out whether Virgin had agreed to the deal or not, simply because Sky didn’t want them to receive the channels.

Having forced Virgin to give up the Sky channels, BSkyB have launched a campaign of negative advertising and publicity. For example:

  • Adverts on Classic FM telling Virgin Media customers they can no longer watch Sky One, and telling them that if they switch to Sky satellite TV, they will be able to catch up on Twenty Four, Lost and The Simpsons in a special “catch up” weekend.
  • Newspaper adverts comparing TV, phone and internet prices from the two companies. While the price given for Sky is a special bundled package, they quote the total prices for individual services from Virgin, making it seem more expensive

This week, Virgin Media announced their new 20Mb/s broadband service, a product that has been in the pipeline for some time, and which had nothing to do with the Sky dispute. They described the new product in a press release. While they do say they their competitors can’t match the service, there is no mention of Sky (or any other competitor), and anyone who understands broadband will realise that Virgin’s technology is superior as they have a purpose-built fibre-optic network, rather than squeezing broadband down copper phonelines using ADSL. But Sky responded straight away, issuing a statement accusing Virgin of pushing up prices in the broadband market, and making dubious claims about their own service. Anyone who doubted which side is most “behaving like children” should take note that one company’s press release promoted its own product, while the other criticised the rival’s.

As if all that wasn’t bad enough, it seems Sky News even launched a subtle smear campaign against the Virgin name. I’ll add the caveat that I don’t see Sky News myself, but a poster on the BBC website claimed that in the aftermath of the Cumbria train crash, Sky’s report was heavily biased towards blaming Virgin Trains for the accident, at a time when the rest of the media were concentrating on a faulty track as the likely cause.

It was time someone stood up to Rupert Murdoch. He controls both one of the main broadcast platforms (satellite TV), the channels, and even many of the programs such as Twenty Four and The Simpsons (which are distributed by 20th Century Fox). His competitors are also his customers, and as has been seen, he can use his position to name his own price for his channels (which have the programs and movies people want to watch because he owns those too) safe in the knowledge that if they refuse to pay up, he can remove channels then poach the customers by urging them to switch to his platform. If Virgin hadn’t stood up to Sky, next time around, the price could double again. I’m not even going to touch on Murdoch’s control over other parts of the media such as the newspapers.

Fortunately, not everything is quite going Sky’s way. As a result of pulling channels from Virgin, they have lost 10% of the audience for their basic channels, so advertisers have indicated they will ask for refunds. In a separate development, Sky had announced it plans to withdraw its channels from Freeview, the UK’s free-to-air digital terrestrial platform, and to broadcast pay-TV channels instead. This has angered the other Freeview shareholders such as the BBC and ITV, who have asked the regulator Ofcom to strip Sky of its share in Freeview. Sky is also under investigation by the Office of Fair Trading after it bought a 17.9% stake in ITV, in a move widely seen as intended to block Virgin from buying ITV. Let’s hope the tide will start to turn against Sky, but it’s going take a long time and many more battles before healthier competition can be introduced into the British TV market.

3 responses to “Sky high arrogance”

  1. brian

    “I know Virgin are not offering a reduction in price as a result, ”

    Actually they have increased prices without adding anything to the packages! Nobody noticed this.

    I do have a criticism of Sky, though : I can’t watch some cricket world cup matches on sky sports as they are shown via the red button, which does not work on cable. I can’t help thinking this is a ruse to get people to leave cable.

  2. Rich

    The reason the prices did not decrease with Virgin Media due to the loss of the sky channels is simple – these were free channels which were on the free TV service called Size M.
    No customer paid for these channels so when they came off, they still got the same channels they actually paid for, hence, no price reduction.

    Another fact that I think few people are aware of, is how Sky bought the carriage rights to Virgin Media channels such as Living and Bravo for 80% LESS than they had previously paid for them! They then went to Virgin Media with the bare-faced cheek to want to charge over twice the previous price for their own channels!!!

    I hope that sky are forced into paying a fair price for the Virgin Media channels if Ofcom find that Sky have abused their market power (which is obviously the case) to get these for less than they are worth, and that they are forced to drop their price for their channels so that Virgin Media can get these back to their customers.

    I suspect that Virgin Media will not want to get these back though – the impact to Virgin Media has been smaller than expected with fewer customers leaving to go to sky than anticipated. The money saved is being invested in improving the on-demand services, so I’ll be interested to see what happens!

  3. Whitespaces

    I’ve had virgin media for 2 months now and was weighing up which service to go for for a while when I decided to go initally for Sky. However having completed their online forms I was horrified to notice the “£26 a month” had suddenly gone up by the “hidden” costs of set up (I wanted sky plus) which went to over £200! AND I had to fork out an extra 15 quid a month for sky plus. Sky are a money grabbing, greedy company and even though they are in a much easier position to reduce their prices to compete with Virgin they haven’t done.

    I now get broadband, phone, XL tv and v+ box for £35 a month, the setup was £25 WHiCH WAS TAKEN OFF THE FIRST BILL anyway, so basically it was free. This is SO SO SO SO Much cheaper than greedy Sky. Why should you pay £15 or £10 a month for Sky+ WHEN YOU’VE ALREADY SHELLED at least £100 for it in the first place. Sky are using evil greedy sneaky tactics to win customers. I don’t trust them. I hope Virgin win the battle. Need to get more channels on catch up though!

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