U.K. brewer and bar operator Wolverhampton & Dudley Breweries said it was considering dropping
sky television broadcasts from a number of its bars due to price increases.
Finance Director Paul Inglett said
sky TV subscription prices have risen by around 25% in 2005 to about £1,000 a month, and the company is considering whether the subscription generates enough income to cover its cost.
Wolverhampton & Dudley broadcasts
sky TV in about 250 of its 2,500 pubs.
Inglett, speaking in a conference call with reporters, said he thought other pub companies would be considering a similar move.
The bar industry is coming under mounting pressure to cut costs, as a result of rising energy prices and increases in industry regulation-related costs.
BSkyB, which is 37% owned by Rupert Murdoch's News Corp., is the U.K.'s largest pay-TV platform, with nearly eight million subscribers. Exclusive rights to show top-flight football games in the U.K. has been a key growth driver.
As early as August, pub operators were complaining about planned increases in the amount BSkyB charges bars and clubs to subscribe to its sports channels. The operators said BSkyB was hiking prices by around 15% to 20% a year.
BSkyB is estimated to generate £190 million a year from sales to bars and clubs, but that would rise to £240 million by 2007 if it continued to hike prices at the current rate.
A BSkyB spokesman said
sky's service was "good value" for bars.
A person familiar with the matter said internal BSkyB figures showed an average subscription price rise for bars or pubs of 12% when the company raised prices in September 2005. This person said BSkyB operated a "banded" pricing structure reflecting the size and location of pubs so some may have above-average prices.
The person also pointed to comments from Wolverhampton & Dudley in 2003 in which it said it planned that season to cut to 190 from 280 the number of bars taking
sky. About 250 of its pubs continued to subscribe.
Earlier November the European Union reached a tentative deal with U.K. soccer authorities to break up
sky's monopoly on soccer rights for the 2007 to 2010 seasons. However, the broadcaster is still expected to retain the bulk of rights.
Cable broadcaster NTL Inc. (NTLI) told the Premier League, which auctions soccer rights for England's top-20 clubs, that it could construct a competitive model selling rights to pubs if BSkyB were forced to give up 50% of Premiership matches. Most analysts see BSkyB retaining broadcasting rights for over 80% of the 2007-2010 soccer seasons.
Source: Business Online