February 17, 2011

Neil Berkett talks about Sky Atlantic on Virgin Media

Another piece from The Guardian, who are giving Virgin Media a fair bit of coverage today:
Neil Berkett, the Virgin Media chief executive, agreed that Sky Atlantic is "a great product". But he admitted that Virgin Media customers would not be getting the channel "anytime soon".
"[BSkyB] have an unrealistic price on the product," Berkett said. "It is a great product but I don't want to get into a war of words, I did note Mike Darcey's comments. I understand the position they are taking."
When asked about Virgin Media's relationship with BSkyB, Berkett described it as "cordial", despite the two competing pay-TV companies often finding themselves at loggerheads over industry issues.
However, he also said that consumers were "suffering" from BSkyB's dominance of UK rights to Hollywood movies, currently the subject of a Competition Commission investigation. "Our view is consistent, it is the same in respect to sports and movies," he said. "Sky has control and consumers are suffering as a result of it."

18 comments:

Erich said...

Berkett is right. Consumers are suffering as a result of Sky's control over premium movies and sports. much like they're suffering from the country's Ferrari dealerships' unwillingness to let people buy their cars at what Berkett considers a "realistic" price. I demand an investigation.

Nialli said...

Not sure I agree with your Ferrari comparison. Maybe this is more like haggling with a dealer over the price of a secondhand Golf rather than a Ferrari? We have is a willing buyer and a willing seller, they're just can't agree the price. Sky wants a return on its investment, Virgin doesn't like the initial price being asked. I have no idea what's realistic and what's unrealistic, but Berkett's tone to me suggest a deal could be done if Sky moved a little. We've been here before of course, and the customer is in the middle.

Moroboshi said...

Berkett of course takes his usual arrogant stance where he is right and so everyone must suffer. He could have offered Sky Atlantic as an extra channel with small top-up price attached to it. If people paid the price, then he would be proved wrong. If not, then he's right.. but as Berkett is always right so there'd be no point in that.

Or he could have winked at the interviewer and said "well our customers have fast broadband you know, so they can see Sky Atlantic content somehow...".

sibod said...

I suggest the problem is that Sky are offering it 'free' to their own customers, and that for Virgin to carry it at the wholesale price Sky have set, it would mean they end up having to charge their customers more than Sky are their own, so subsequently feel that Sky are asking too much for it - especially given the low ratings for the shows.

Why should Virgin price their packages higher than Sky just for the sake of adding a channel that is of a minority interest?

jp said...

The problem is a channel's worth is based on the number of viewers it draws, Virgin are probably willing to pay according to this, Sky however probably feel that, no, the price should be a reflection of what the content cost them.

I know people can say Sky's right, but if they can't get enough viewers to watch then a channel's value to Virgin isn't that great. If Sky Atlantic's average viewing figures are 100,000 for arguments sake then it could be suggested that Virgin would add another 30-50,000 viewers, now what value should Virgin put on a channel that in all liklihood onlygoing to appeal to 1.25% of it's customers.

Sky Living is one of the biggest channels outside of terrestial with it's top shows often hitting 700,000. therefore the value of Sky Atlantic is less than half that of Living.

Put it another way, advertisers won't care for the investment Sky have put into Sky Atlantic, they'll pay according to viewing figures, as shoud any carrier.

where consumers are suffering is in the size of Sky Broadcasting and Sky Productions. If the Sky channels were a stand alone company they would have to create a channel that they could sell for a decent price. they would need to be smarter with their ivestments and wouldn't be flinging money at things to buy content just so others can't. I honestly believe that the time has come to break up Sky into two distinct companies. One a carier and one a producer as it's the only way to create a free market and then you wouldn't need the government telling Sky to lowe the prices of it's packages.

John said...

there is also the fact that Virgin is physically unable to provide its new Tivo service to anyone who isn't cabled. so where I live, my sister-in-law can get it, but I cannot.
how much choice is that?
john , york

Erich said...

Niali sayz
Maybe this is more like haggling with a dealer over the price of a secondhand Golf rather than a Ferrari?

I don't think so. Even Berkett recognizes that Atlantic is "a great product", and there's no doubt that it's an attractive channel for a very specific, and possibly a more discerning audience. In fact, so much so that some have felt compelled to break with their long-standing moral codes on piracy, which I doubt they would have done over "secondhand Golf". ;)

I'm not saying Sky are 100% in the right here, we don't know what the numbers on the table are, but everything we know about Virgin tells us that they've always been reluctant to invest in content, always looking to do things on the cheap. That's why VM customers have always been more likely to get a new shopping channel for every 2 or 3 new HD or premium channel added to the Sky line-up, and I find it utterly disgraceful how initiative, innovation and investment is almost penalized in this country.

Square eyes said...

Sorry to everyone

Sky thought Atlantic was going to be the next big channel, well guess what they were wrong.

There is some truth in what everyone is saying, except for one thing - most of the content has already been seen on VM on-demand, so why in the hell should a top price be paid for a channel which is getting such great viewing figures (not)?

Erich said...

But you don't know what this supposed "top price" actually is.

Square eyes said...

@Erich

I would guess niether do you, however as always with Sky trying to be a bully, it wont be cheep.

And again it's a crap channel anyway with a couple of okayish programmes.

Nialli said...

I disagree with Square Eyes that it's a crap channel - it appeals to me very much - but I do agree that Sky's initial asking price is probably more likely to reflect Sky's inflated investment in it rather than it's value to Virgin's majority of customers.
btw, I drive a second-hand Golf rather than a Ferrari, and even if I could afford the latter would prefer the former ;o)

nick said...

Virgin Media got proper stiched up, sold their channels, Sky closed them and opened some new ones that aren't part of the deal.

At least we've still got Living, sorry Sky Living :-)

Well done VM.

Erich said...

Square eyes says
I would guess niether do you

Of course not, but I wasn't the one who made reference to it as an absolute fact.

... it wont be cheep.
Spot on. Which is why VM, who always want to do things on the cheap, aren't getting it. My point exactly.

And judging this channel purely on ratings is completely irrelevant. It's like saying Mad Men is a crap show, because it doesn't get Strictly X-Dancing on Ice ratings. The channel was clearly aimed at a different niche audience, and anybody who thought Sky expected astronomic ratings for shows that had mediocre to poor ratings on other channels with wider availability is simply missing the point.

Niali says
Sky's initial asking price is probably more likely to reflect Sky's inflated investment in it rather than it's value to Virgin's majority of customers.


You may be right, none of use know the asking price, but that's almost besides the point. What we have here - again - is an example that highlights the differences between VM and Sky. Sky have been prepared to take a risk, show some initiative, make an investement, like they have always done in advancing TV in this country. VM would never - and have never - taken such a risk, and as we have seen again and again, won't even support Sky in doing so. They just want to leech and get things on the cheap. When they can't have it, they run crying to Ofcom, as Berkett himself smugly pointed out. They're the TV world's equivalent of dole leeches.

Funnily enough, VM themselves aren't shy about over-charging for their services, as we've seen with the wildly expensive Tivo box, their recent pay-more-for-less channels price hikes, and their jaw-droppingly absurd traffic management on broadband, which completely warps the value of the product. The same broadband they refused to open up to the likes of Sky, the way they want access to Sky's services themselves.

You may be unhappy that you're not getting Atlantic, and occasionally other Sky offerings, but I promise you, you would have been much worse off without the competition from Sky.

Harkaway said...

@Erich

I'd like to disagree with the idea that Sky are an innovative company. They typically allow other broadcasters to gauge public taste (Lost, 24, Mad Men, etc), then outbid the channel who introduced them and made them popular to show later series. With Sky Atlantic they finally recognised that HBO had done lots of great programmes so they bought the back catalogue and the uncommitted new shows for the next five years. It saves them the effort of actually evaluating the potential of new series. But the people who are drawn to quality American drama have already seen much that is being broadcast and Boardwalk Empire hasn't been that big a phenomenon even in the U.S. (although that may change in Series 2). The new content is limited, so I'm all for letting the market work to see if the price may fall.

I hope the deal is done eventually, but in the meantime it convinces me that I needn't see television programmes only when they are broadcast live. Sky's negotiating stances have taught me to watch box sets, to download and to develop other skills in my pursuit of content. Virgin may not be a perfect media company, but I don't really want Sky to control everything, so I'll be patient. Besides, there are only so many hours in the day; I have plenty to watch right now.

Erich said...

Harkaways sayz
I'd like to disagree with the idea that Sky are an innovative company. They typically allow other broadcasters to gauge public taste (Lost, 24, Mad Men, etc), then outbid the channel who introduced them and made them popular to show later series.

I already addressed this in another thread where I listed Sky's unparalleled record and pointed out that it's obviously completely unfair to make it Sky vs every other broadcaster out there. But their innovation is just as much about investment in digital broadcasting in the first place, HD, PVR, 3D, their sports coverage, etc, etc, and even co-production of shows like Battlestar Galactica. When it comes to advancing television in this country, VM can't even be mentioned in the same breath as Sky.

Nialli said...

...and Sky shouldn't be mentioned in the same breath as BBC or Channel 4 when it comes to original programming and content.
Sky's deep pockets and astronomical profits permit it to experiment and take risks, whereas VM's debt burden restricts capability regardless of intent. That VM keeps giving its customers more with TV (VOD, HD, 3D, TiVo) is quite remarkable and shouldn't be ignored.

Erich said...

...and Sky shouldn't be mentioned in the same breath as BBC or Channel 4 when it comes to original programming and content.
Correct. Comparing Sky with license fee beneficiaries who work under a completely different mandate would be even more dishonest than the Sky vs Everyone Else comparison, when it comes to picking hit shows.

Sky's deep pockets and astronomical profits permit it to experiment and take risks, whereas VM's debt burden restricts capability regardless of intent.
Sky has earned its profits and it's position in the industry on the back of investment and innovation. They can hardly be blamed for VM's inability to do the same.

That VM keeps giving its customers more with TV (VOD, HD, 3D, TiVo) is quite remarkable and shouldn't be ignored.
Nobody is ignoring it, but as I've stated before, and as even Square Eyes admitted, virtually every step forward VM has taken has either been in response to actions by Sky, or on the back of Sky's content. VM have had a next gen fiber optic network at their disposal for over a decade, and failed to make the most of it. They've had an almost comically under-developed VOD service, which marketed correctly could have been a real game changer, and they're currently hard at work finding ways to mess up their Tivo roll-out as well. And they're off to a great start with the price and half-finished software. ;)

Nialli said...

This is turning into a Sky vs Virgin argument and I think I'll retire quietly as I don't think we will ever agree and it's old ground we're covering.
Everyone's entitled to an opinion.