Tuesday, November 14, 2006

What are BSkyB doing with their money?

Remember British Satellite Broadcasting (BSB) launching the squarial? That was 1989!

Late 1990 BSB and Sky were both struggling to make a profitable satellite TV system. They 'merged' on Sky's terms to form BSkyB, now commonly known as Sky.

Sky has no satellite, and rents use of the Astra system for a quoted £50m in 1990.
They established offices at a run down West London industrial estate, now also home to Harrods distribution centre.
They gave everyone free satellite dishes and set-top boxes and started charging subscribers a monthly fee for access to more TV channels than the 4 terrestrial ones. (Channel 5 launched in 1997 by a Spice Girls cover of a 1960s hit 5-4-3-2-1 :) ).

In the past 16/17 years what have Sky had to pay for?

New programmes? No
Producing new channels? No, someone else does this and _pays_ Sky to transmit it (The cost of which is now being investigated by Ofcom). Sky's few channels all carry tons of adverts.
Infra-structure? No, still renting an Astra satellite. Sky Digital has been running since 1998.
Lining shareholders pockets? No. 5 year share price chart shows price change from over £9 to approximately £5.50p today.
Exclusive content? No. Football and new movies are only available at extra cost!

Ok, this is great. So the subscription charge for their service must be dropping nicely??
No. It was £15 a month in 2002, now it is £21 a month.

Hmmm, must be some good extra features??
No. You want to record what you've got? £10 a month extra!
Improved picture quality? Ah HD your thinking? £10 a month extra for about 10 channels you've already got in HD! I'm not paying for HD when the standard service is not even providing the specified 576 lines!

Hell they must have fabulous customer service, sending everyone Christmas hampers, loads of free special offers. That's the only other place the money can be going? No.

Customer Service is non-existant. I called technical support the other _night_ - ie off peak. This was an 0870 number (read 10p a minute). After 1 hours 15 minutes on the phone the picture technical experts couldn't tell me if I could connect my standard box with S-Video or Component. They said use SCART. My HD projector hasn't got a SCART. They couldn't help.

This doesn't add up. As the title of the post says, What are BSkyB doing with the money? Reading today's telegraph even Murdoch senior and Murdoch junior don't know! Their take on the next 6 months figures differed by about £100m.

Update: 3 days after my article they spent nearly £1bn buying a controlling 17.9% stake in ITV to stop NTL and ITV merging. They don't care if their customers are happy, they are squandering all their cash fighting to keep their monopoly so customers have no choice but to stay with Sky.

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