Thursday, 29 July 2010

Sky and the HBO content coup

Today came news that BSkyB (owner of pay-TV platform Sky TV in the UK) had signed a whopping content deal with HBO - the hugely successful cable TV operator and producer.

The deal will give Sky access to HBO's first class library of productions - including The Wire, The Sopranos, True Blood and Martin Scorsese's eagerly-awaited crime drama Boardwalk Empire. It is believed to be worth around £150m over five years.

I think this illustrates a couple of interesting developments at Sky.

Clearly as Sky have recently been forced to relinquish their monopoly on Sky Sports channels, by allowing BT Vision to carry live Premiership games for example, Sky are looking to diversify their consumer offer. Whilst Sky claim that only 5% of their viewing is football related, it doesn't take a genius to understand that a far higher proportion of their subscriber revenue is directly football related. If this revenue comes under any kind of threat (not sure how much impact the BT deal will have in the short term), then clearly Sky must find other reasons to encourage subscribers to choose Sky, stay with Sky and ideally become a high value customer through taking Sky + and HD options too - which seems to be going very well right now.

So there is diversification going on to shore up subscribers, but also I feel this is part of a confident Sky move to strike for audience growth also as rivals ITV and Channel 4 go through a period of upheaval and re-gearing - with new management teams and profit short-falls.

Sky is reported to have a content development/acquisition pot of 1.7 bn GBP - versus BBC 2 (who originally screened The Wire to great acclaim) having c. 500 mill GBP. It is certain that Channel 4's programming budget will be under increased public scrutiny - indeed this HBO deal really feels like the sort of deal Channel 4 would have been 1st in line for 4-5 years ago. And ITV seem to struggle for consistency in either produced or bought in formats.

That said, Sky also have had their own troubles with self-made programming. Davina McCall's big budget Got to Dance failed to pull in big audiences earlier this year.

It also means that The Wire will soon be on the broadcast sponsorship market - who will be first in the queue? The Baltimore Tourist Authority perhaps?

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