OOps, sorry about that, must be an in house web sight too.
Sky dispute is battle for room at 101
Andrew Harvey reports from the Westminster media forum where the BBC answered challenges about its accountability and said Sky’s threatened tactics could alienate viewers
The dispute between the BBC and Sky was given a spirited and public outing last week when the spectres of bewildered viewers and serious money were called up by both sides.
Sky has responded to the BBC’s decision to change the way in which it broadcasts digital satellite television by threatening to remove channels One and Two from their prime position on the electronic programme guide (epg).
The dispute is currently awaiting adjudication by the Independent Television Commission and the verdict will have significant consequences for all public service broadcasters. In the meantime, there was a lively skirmish between the two sides at the Westminster media forum when Carolyn Fairbairn for the BBC and Richard Freudenstein for Sky set out their contrasting views.
Sky says it all comes down to money and whether a price can be agreed. At present the BBC pays Sky £7m a year so that its programmes beamed by satellite can be encrypted. In other words, coded so that each set top box receives the appropriate BBC signals – or in the case of Sky, the services the viewer has agreed to pay for.
In March, the BBC announced it would broadcast ‘in the clear’ by using a different satellite focused more specifically on the British Isles and that it would no longer require – or pay for – Sky’s encryption and associated services for which the company was proposing to charge £85m over the next five years. It would still expect to pay for its slots on the epg.
Faced with a substantial loss of revenue and the likelihood of ITV, Channel 4 and Five following the BBC’s initiative, Sky has said the BBC channels will be moved down the epg because its unencrypted signals would clash with Irish broadcaster RTE which pays for slots 101 and 102 in Ireland. The BBC disputes there would be a problem.
According to Fairbairn, the BBC’s director of strategy, Sky is threatening to relegate BBC One and Two to slots 214 and 215 on the epg, an obscure zone where viewers are unlikely to come across many of the BBC’s quality programmes.
According to Freudenstein, Sky’s chief operating officer, the BBC is arguing for ‘a free ride’ at the expense of his company and other broadcasters.
By law, public service channels must be given ‘due prominence’ on an epg. Apart from the money question, much of the dispute centres on the interpretation of this, as yet, unspecified condition. The ITC has been asked by the BBC to give a ruling.
The BBC announced that it would begin unencrypted broadcasts at the end of this month but it has accepted Sky’s suggestion to continue the current arrangements until the ITC has made its decision.
The money question
The BBC’s contract with Sky runs to the end of this month. At present the BBC pays £7m a year for the encryption of all its services and for its access to Sky’s epg and on-screen listings.
Sky had proposed to increase its charge to an average of £17m, the same rate that it charges ITV. A complaint by ITV that this was unreasonably high was rejected last year by the ITC.
By broadcasting in the clear, the BBC says it should be treated in the same way as CNN, the international news company, which pays Sky £28,000 a year (due to rise to £70,000).
The BBC is prepared to pay Sky £70,000 a year for each of its 25 slots covering its network and regional tv services at an annual cost of £1.875m.
Carolyn Fairbairn says that the BBC’s plans to make regional variations available to viewers wherever they live in Britain will require only minor software changes for which Sky would be entitled to a fair one-off payment.
The BBC does not want to be on slots 101 or 102 in Ireland and sees no reason why the present arrangement whereby encrypted RTE signals are received on these slots should not continue.
The BBC’s proposals are seen as a test case. If it can broadcast successfully in the clear without infringing content rights deals and if the ITC upholds the proposition that the BBC should be treated like CNN, the loss to Sky (based on the new charges) could be £30m a year if the other UK broadcasters went in the clear.
Fighting talk as rivals meet at the forum
Freudenstein of Sky
In every other area of its business – electricity, water, talent, facilities – the BBC pays commercial rates. There is no reasonable case for making Sky’s conditional access system an exception.
We believe that for BBC One and Two to broadcast on slots 101 and 102 the BBC needs to take our regionalisation service.
Slots 101 and 102 are already occupied in Ireland by RTE. If the BBC does not take a regionalisation service from Sky its channels will not be able to remain at 101 and 102.
The BBC’s proposals to enable viewers to make regional choices would require substantial changes to our systems. The BBC misunderstands our technology.
It would be quite wrong for parliament to mandate platform changes simply to accommodate the changing strategies of the BBC.
Parliament should not intervene in a commercial dispute to tilt the playing field in favour of the BBC.
Fairbairn of the BBC
If we allow programmes – news, quality drama, documentaries, arts, minority interests – to be buried deep in the epg, people won’t watch them or they’ll watch them a lot less.
The official reason Sky gives for the planned demotion of BBC services is a technicality to do with a contract Sky has with RTE. We think this is a red herring.
The scarcely concealed reason is that Sky is trying to make the BBC renew a conditional access contract. It wants to deter other broadcasters from following the BBC.
We don’t blame Sky – they’re a tough commercial operator trying to protect a lucrative revenue stream. But it does mean that regulatiuon has a vital role to play.
We hope the communications bill will tighten up what is meant by due prominence for public service channels so that epg owners can’t interpret it in a way that suits them.
The principle of due prominence should be extended to include regional variants of public service channels so epg providers have an obligation to make them easy to find.
Thanks Robbie, the dispute is certainly becoming interesting and both sides have quite good arguments.
Personally, I don't think that a move down the EPG would harm the BBC, as long as the channels were all in one block. It may also work against Sky in the long run, as people may opt for cheap FTA receivers for receipt of BBC and later the other terrestrial channels, they can then put the channels where they want and will not be so easily tempted to subscribe to Sky.