Advanced Television

BSkyB v the rest: will Sky’s clouds clear?

October 18, 2010

This Friday, October 22nd, BSkyB will unveil its Q1 results and a few hours later hold its AGM for the trading year that ended June 30th. It is also likely that James Murdoch, currently chairman of the broadcaster will comment on News Corp’s wish to take full ownership of BSkyB; News Corp currently holds 39.1 per cent . Murdoch, or CEO Jeremy Darroch, will almost certainly respond to the latest slew of complaints, grumbles and negative spinning from the likes of the BBC, The Guardian newspaper, Associated Newspapers, Telegraph Media, British Telecom, Virgin Media and others on the merits of full ownership by News Corp.

Most analysts expect BSkyB to announce further gains on top of its current 9.86 million subscribers, adding around 53,000 in the summer quarter-year. Its pre-Christmas (Q2) sales push last year represented a net gain of some 172,000. A similar number this year would be enough to push the total beyond the 10m mark, and with the quarter’s profits sharply up at around £227 million (£198m last year) helped by an 8 per cent rise in revenues to about £1.5 billion.

However, James Murdoch will face a few angry investors. Investor advisory group PIRC is arguing that James Murdoch ought not to be re-elected chairman, as he is clearly not independent . PIRC is also lobbying that shareholders ought to deny many of the existing Board re-election for much the same reasons. These objections will almost certainly be swept aside as BSkyB’s major shareholders have in years past recognised and approved the Board’s make up.

The bigger question of whether BSkyB’s Board will agree a take-over by News Corp, or will escape scrutiny by the UK’s business minister, Vince Cable, will emerge over the next few weeks. Cable’s remit is to decide on whether full ownership by News Corp of Sky is against the public interest. Cable will have to rule on the allegation that News Corp would then have “unprecedented market power” and have far-reaching consequences in regard to media plurality.

Even the mighty – and generally free market – Economist has weighed in with its opinion. The Economist suggests that the UK’s existing media impartiality rules would prevent Sky News from developing into a UK version of Fox News. “If he [Rupert Murdoch] gets hold of Sky and uses it unfairly to crush rivals, he should be punished. If he simply wants to run a successful, competitive outfit, good luck to him”.

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