Rupert Murdoch’s curiously muted reaction to the collapse of BSkyB’s market capitalisation has, it seems, caused consternation among his fellow BSkyB shareholders. Coming from anyone else the suggestion that the television company had been over-valued would seem unexceptionable. But because Murdoch voiced it, and in a very public way, it has spawned the rather Machiavellian theory that he is beating his fellow shareholders down, the more easily to buy them out.
Whether or not this theory has any merit, it should not obscure the fact that he could also be telling the unvarnished truth. The climate is changing – and not in a way that will necessarily benefit BSkyB.
The stock exchange rout centred on three events: the untimely exit of BSkyB’s two most senior executives, Sam Chisholm and David Chance (they can’t both be suffering from ill health, can they?); the exclusion of BSkyB as a shareholder from the ‘successful’ DTT consortium, BDB; and the disclosure of a report recommending the Premier League set up its own TV channels once the BSkyB deal has run its course.
As it happens, none of these events creates a short-term threat to BSkyB: it will continue to be a 14m a week money machine. In fact, the DTT ‘blow’ could well be a blessing in disguise. BSkyB avoids the (considerable) upfront capital risks of DTT, but will probably retain formidable leverage in the areas of technological expertise and programming. As for Chisholm, maybe his abrasive management style was uniquely suited to the past, but would this necessarily have been the case in the future? At best, the jury can only stay out on the new executive team, until they prove themselves one way or the other.
But the third issue, touching as it does on TV rights for exclusive sports events, may have more serious implications for a major part of BSkyB’s future revenue. BSkyB’s Premier League deal utterly changed the landscape of sport, and made the satellite TV station extraordinarily successful as a result. In the future it will find it harder to retain the initiative. The threat is likely to come not so much from a slew of Premier League digital channels, as the increasingly sophisticated negotiating skills of top football clubs like Manchester United and Newcastle.
And there are other threatening noises off, such as the Office of Fair Trading, which considers the Premier League deal and its like a restrictive practice – and would dearly like to see it dismantled. That’s going to be a pipedream in the near future, given the grinding slowness of the legal process. But the OFT’s lobbying could eventually provide an unappetising cocktail for BSkyB when mixed with increasing public dissatisfaction over exclusive sports programmes (MW July 3) and a Heritage Secretary prepared to do something about it.
News Analysis, page 22