Sky avoids own goal in interests of winning digital championship

Sky’s U-turn this week on football rights showed it cannot yet anger those in power who are able to limit its digital plans. By Nick Higham. Nick Higham is BBC TV’s media correspondent

Last week Sky Television performed a U-turn: a sudden, spectacular, rubber-smoking, joy-rider’s U-turn.

On Thursday morning, Sky’s head of sport, Trevor East, told Mike Lewis of BBC Radio 5 Live that he, Lewis, wouldn’t be getting the rights to radio commentary on next month’s four-way football tournament in France, in which England is playing.

Lewis was cross. He hadn’t even been given an opportunity to bid. What’s more, East gave no reason for the decision. But he did say that Capital wouldn’t be getting the rights either – leaving Lewis to conclude that Sky was deliberately withholding them.

He went public – which in turn angered East, who accused the BBC of orchestrating a witch-hunt against Sky. By 6.30 that evening the FA and the new (and entertainingly outspoken) Sports Minister Tony Banks had weighed in, both expressing their hopes that radio listeners should not be deprived of a chance to hear the matches.

A few minutes later and Sky had performed its volte face. Lewis was rung and told he could have the rights after all. What’s more he could have them free, and so could every other radio station in the country.

So what brought this on? Sky wouldn’t confirm it, but it had been widely reported to be planning to offer the matches in France on a pay-per-view basis. If that were the case, it might make commercial sense to deny radio stations the right to live commentary, thus giving football fans no option to pay up.

But it wouldn’t make much political sense. If there’s one thing calculated to go down badly with New Labour’s new Heritage Secretary, Chris Smith, and Tony Banks it’s the suggestion that BSkyB is abusing its monopoly position to the detriment of “ordinary sports fans”.

And BSkyB can’t afford to get the Government’s back up when it’s engaged in the delicate preliminaries to the launch of digital television. DTN, the weaker of the two bidders for the main digital terrestrial licence, has already banged on endlessly about what a bad thing it would be for competition if BDB, with BSkyB as a shareholder, won the licence.

Now there is a report (in last Sunday’s Observer) that Don Cruikshank, the director-general of Oftel, has made his own representations to the Independent Television Com- mission about the consequences for competition if BDB gets the licence.

It’s not quite clear how this squares with Cruikshank’s welcome for BSkyB’s own plans for digital satellite television, confirmed last week, which involve a joint venture (BIB, or British Interactive Broadcasting) with BT.

A year ago Cruikshank was expressing reservations about such a tie-up between the dominant players in the telecommunications and pay-TV markets. Last week he gave the proposed deal his blessing, on the grounds that it would promote extra choice for consumers and that he had the powers if necessary to ensure that BT and Sky did not take unfair advant age of their position as digital gatekeepers.

Cruikshank particularly welcomed the fact that BIB plans to make its set-top boxes (subsidised to cost 200) as compatible as possible with receivers for digital terrestrial television, and indeed is talking to BDB about providing some of the same interactive services, like home shopping and home banking, which will be available through digital satellite.

For their part, Sky and BT were at pains to emphasise that they are offering a digital distribution platform which any other broadcaster or interactive service supplier is free to use, on fair and non-discriminatory terms.

So Sky won’t want to give the impression to Oftel, the ITC, the Government, or indeed the European Commission (whose approval is also needed for the tie-up with BT), that it might be about to throw its weight about. Yet withholding radio rights to football matches is a perfect example of discriminatory behaviour. Hence, presumably, the change of mind, swiftly followed by the news that all six matches in France would be available on Sky Sports, not pay-per-view.

Meanwhile, Sky’s wasn’t the only apparent U-turn last week. The cable companies’ first reaction to the announcement of BIB’s formation was to point out that they too had plans for digital television, including interactive services, and that they could be running by the autumn.

Except of course that buried in the BIB press release was the news that it would not, after all, launch in 1997 but in the spring of 1998, and that the interactive element of the service would not be available until the summer.

Now the cable companies are talking about delaying until the spring as well. That way their service, Sky’s, and the new digital terrestrial service could all be launched around the same time, and be marketed together.

And the cable companies wouldn’t have to face the awkward question of how to fill some 200 channels of their own in the absence of Sky’s 200 channel service. Since Sky has the rights to all the most attractive programming, the cable companies could be struggling.

That in itself is a useful reminder of Sky’s market power – and the company’s ability to influence other players even when it isn’t deliberately trying.

Media Analysis, page 1


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