July 01, 2010

Sky Sports price hike, OFCOM outsmarted?

Hmmm. Just when you thought that Sky was finally having to fall in line with some OFCOM regulation, they outmanoeuvre the regulator again.
BT today announced pricing for Sky Sports 1 and 2 that is actually cheaper than Sky's own pricing, but they are selling it at a considerable loss after Sky increased the cost of the channels to its own customers (and therefore the wholesale rate it charges BT). It's complex, but here's how The Guardian explains it:

Sky is increasing the retail price of Sky Sports 1 and Sky Sports 2 by £3. Under the complicated wholesale pricing mechanism set out in Ofcom's ruling, this means that the wholesale price of Sky Sports 1 increases from £10.63 a month to £13.42, Sky Sports 2 rises from £10.63 to £13.34 and both channels together rise from £17.14 to £19.07 per month.
For Sky's retail customers, meanwhile, it means that from 1 September the cost of a basic subscription plus Sky Sports 1 or 2 will increase from £26 a month to £29 a month. The cost of a basic subscription plus all its sports channels will increase from £35 to £38 and the cost of all its sports plus its six entertainment bundles will rise from £41 to £44 per month. The cost of its top-end package – including movies – will increase from £48.50 to £51.50.
Sky justifies the hike by saying that the increase is to cover the cost of the extra package of Premiership matches it secured from Setanta/ESPN for next season, but that hardly seems fair and to me it seems a deliberate ploy to undermine the launch of BT's offering: the more customers BT attracts, the more money they lose.
Fortunately for us Virgin Media is understood to be unaffected as it has already signed a separate deal with Sky. Phew.

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