Kate Bulkley, Media Analyst.

A positive spin cycle for Sky

By Kate Bulkley

Broadcast News

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For Broadcast July 26, 2012

After a tough 12 months, the fightback has begun, writes Kate Bulkley.

Itís the summer of love all over again in 2012, but the recipient of the affection isnít long-haired teenagers smoking dodgy substances Ė itís BSkyB.

After taking a beating for much of the past 12 months, including the resignation of chairman James Murdoch (heís still a board director), the indirect effects of the phone-hacking scandal, such as MP Tom Watsonís accusations of Mafia-style operations at News International, and the emergence of Netflix, BSkyB is fighting back. But not in the areas you might expect.

First, thereís how BSkyB won the Tour de France. Okay, gangly Londoner Bradley Wiggins was the champion cyclist, but he was part of Team Sky. And didnít Sky chief exec Jeremy Darroch and colleagues have fun seeing the Sky logo on the team jerseys as millions watched on ITV1, ITV4, British Eurosport and the news reports of so many other channels?

Darroch even got his mug on the live ITV highlights show on the final day as cameras focused on him celebrating in a Team Sky car. No wonder Sky insiders say theyíre delirious about the reported £30m, six-year cycling sponsorship (begun in 2008 and recently extended until 2016) even though the sport isnít screened on Skyís own channels.

Cycling is suddenly a hot sport in the UK, a hot leisure pursuit, and Olympic success could be on the cards too. Plus itís good for your health. Skyís sponsorship and corporate social responsibility teams must be in heaven.

As well as the Tour de France, those smarty-pants people at Isleworth decided to show us all how valuable Sky is to the UK economy. Independent research (commissioned by Sky) has shown that the pay-TV giant contributes £5.4bn to the countryís GDP, with £2.3bn in tax handed over to the exchequer and 120,000 jobs supported by the business. How could we not love a company like that? And shouldnít we be nice to Sky, so it doesnít ship its HQ off our shores, like ad giant WPP?

Then Rupert Murdoch dumps all his UK newspaper directorships, to prove he is pulling back from the UK businesses. Itís a hacking inquiry response with a positive spin for Sky, as it distances ďnastyĒ Mr Murdoch from the company even further. On top of that, Sky has launched Now TV, a £15 per month OTT service. You can bring your own broadband supplier (take that, BT Vision) to the party and be able (eventually) to enjoy Sky Movies, Sky Sports, Sky 1, Sky Atlantic, Sky Arts and more, via your connected computer or tablet.

If you think these moves have no focus, think again. The Sky annual results are out this week and the City is concerned about future growth, given Sky already has more than 10 million subscribers and the competition from YouView, Netflix and Amazonís LoveFilm is hotting up. So thereís a caveat: letís see how Now TV goes because itís either a really good idea to target those who might otherwise opt for rivals, or itís a recipe for what the City calls spin-down, where high-paying, contract subscribers decide they can live with a lesser (and lower-cost) Sky service.

Weíll have to wait another quarterly cycle (sorry) or two to see how it all plays out.

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