BSkyB faces 'a perfect storm'
October 23, 2008
BskyB is facing a "perfect storm" according to a melodramatic note from broker Collin's Stewart on the day Sky shares plumbed a three-year low. The on-coming recession, threats from changing technology and tighter regulation threaten to demolish its core business model, says the broker. It warns Sky risks missing its target of 10 million pay TV subscribers by 2010.
The report said subscriber growth would stall, leaving BSkyB 600,000 customers short of its 10 million target by the end of 2010. “We believe BSkyB faces greater threats to its business model than ever before,” said the report. “Recession, technology shift and regulation could together combine to make the perfect storm.”
If consumers do cut back on subscriptions then BSkyB’s average revenue per user will fall, meaning profits could tumble. Others argue TV subs are prone to be counter-cyclical in recession.
Collins Stewart lists among Sky's other woes the threat of regulation forcing it share more TV rights, relative underperformance in its broadband product, and internet VOD. It says 20m UK homes will have access to internet VOD in three years and it agrees with Continental's prediction (ATV 23.10.08) that at least 13% of TV subscribers will desert to Internet VOD.