Sky may face £20m ad penalty

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Satellite broadcaster BSkyB may have to compensate advertisers to the tune of up to £20m after failing to deliver the audiences it promised on its some of its digital channels, according to a report in The Scotsman.

The report cites claims by unnamed industry sources that viewing figures for an unspecified number of Sky's digital channels are down by as much as 15% - and among the younger audiences prized by advertisers, the numbers are said to be "even worse". Sky disputes the figures, pointing out that its trading position has improved significantly since it recruited Dawn Airey from Five as managing director of Sky Networks.

Airtime is sold on the basis of a rate-card that is fixed annually, based in part on projected audience shares promised by broadcasters. Failure to achieve these levels may then trigger penalty clauses.

BSkyB, deriving most of its revenue from subscriptions, would like to bump up advertising income, at present accounting for less than 10% of turnover.