February 10, 2011

Virgin Media, Sky, and Sky Atlantic (cont.)

I read this and thought it was a good insight into the current stand-off between Virgin Media and Sky over Sky Atlantic. It was posted by Chris, one of the Cable Forum Team - and you can read the ensuing discussion in the Sky Atlantic Cable Forum thread.
Last time round, Sky wanted Virgin to pay a price that reflected Sky's investment in programming on Sky One (in essence they wanted Virgin to help them pay the king's ransom it cost to steal Lost off C4). This flew in the face of the conventional means by which these things are normally agreed (you pay for a channel based on its popularity, not based on what its owner has lavished on it).

Sky might just have got away with this tactic had they not only recently used the popularity argument to negotiate a vastly reduced rate for carriage of the channels VM owned at the time. VM was rightly able to point out that what's sauce for the goose is sauce for the gander.
Nevertheless, Sky threw its toys out the pram and spent a few weeks being faced with the reality of ratings sliced by a third and advertisers making dangerous noises about wanting lower rates for slots on Sky One before eventually cutting a deal that essentially valued Sky Basics and VM's channels on the same basis. All of which is now a bit academic as VM has sold the lot to Sky anyway.
As you say, Sky won't be as worried about advertising rates this time round because the channel has never been on VM, so nobody is going to complain that viewing figures are lower than they thought they would be. On the other hand, I would not be at all surprised if once again Sky's valuation of the channel in negotiations with VM has more to do with what Sky has spent on it rather than what it's actually worth in ratings terms.

1 comment:

Gunslinger said...

"Sky threw its toys out the pram and spent a few weeks being faced with the reality...."

It was more than a few weeks, wasn't it over a year before the deal was cut?

I assume similar financial considerations were behind the delayed appearance of Sky1 HD last year, and the non appearance to date of the other Sky Basics HD variants?