Credit: Steindy/Wikimedia

Sky customers will pay the price of the football rights war

The broadcaster is hiking prices by an average of £2.50 per month.

by Jack Torrance
Last Updated: 29 Jul 2015

Sky better hope its customers reeaallly like football. They're all going to be hit by an average price increase of £2.50 per month, or £30 per year, according to the FT, just weeks after the broadcaster agreed to pay £4.2bn for Premier League TV rights. Those who just subscribe to its 'Family Bundle' are likely to be particularly miffed, as that will increase in price by £3 to £36 per month, while the Sport Bundle will be up £1 to £47.

Sky landed the lion's share of Premier League rights after bidding 83% more than in the last auction three years ago, as it fought a fierce battle to see off BT. Once the only major holder of Premier League rights, Rupert Murdoch's outfit has had a fight on its hands to deal with the threat of the former state-owned  telco, which has been looking to diversify in the last few years.

Both the companies are set to make a move into mobile phones imminently, after BT agreed a deal to buy EE, the amalgamation of Orange and T-mobile, and Sky organised a tie-up with O2 to sell phones on its network. This movement towards 'quad-play' – offering TV, mobile, home phone and broadband in one package – has been the big buzzword in telecoms of late. Virgin Media has been offering it for ages and Vodafone has confirmed plans to launch TV services.

As well as being a potentially attractive deal for customers, rolling TV, mobile and internet into one also has the scope to improve the companies' customer retention rates. It's much more of a hassle to swtich broadband providers if your current one has got you by the mobile phone.

That same logic seems to underpin Sky's decision to hike prices. Its 'churn rate', the number of people cancelling their subscriptions, fell to 9.2% in its second quarter of this year, the lowest level since 2003, something its chief executive Jeremy Darroch has attributed to increased takeup of its internet-connected set top boxes.

All this action in the telco sector hasn't gone unnotticed by the regulators. TalkTalk and Sky have seized upon an Ofcom investigation into quadplay to call for a breakup of BT's Openreach network, and Virgin Media's been banging the drum for a probe into how the Premier League's rights are sold. 

With more customers tied in to multi-service packages and the battle with BT far from over, there's little to suggest Sky couldn't keep hiking prices in the future to fund its possession of the Premier League rights holy grail.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today