Rapid TV News
Sky Deutschland: 'A disappointment'
Chris Forrester ©RapidTVNews | 03-02-2010
A 15-page report to clients from investment bank Morgan Stanley doesn’t pull its punches as far as Sky Deutschland is concerned.
Despite another management shake-up it seems that Sky Deutschland, News Corp’s German pay-TV operation is far from out of the woods. Last year Sky-D captured German Bundesliga soccer rights for 4 years, rebranded and relaunched itself at a cost of €100m, expanded its retail offering and boosted its HDTV portfolio. That’s the good news. The bad news is that subs numbers “remained disappointing” says the bank’s report. Net additions for Q3 (last autumn) were just 67,000, while the pre-Christmas Q4 net is expected to be even worse (at 40-65k) according to the bank.
Morgan Stanley says: “According to Mark Williams, Sky had a ‘disappointing’ October, an ‘ok’ November and a ‘good’ December. Sky has had a couple of weeks of 30k gross additions in December. This has encouraged Mark Williams to assert that Sky Deutschland has begun to ‘crack’ the combination of sales offer and marketing to push forward more satisfactory take up of the Sky service.”
The bank summarises its expected action for 2010, saying: “The key to establishing value in Sky is to get the consumer proposition to work. In 2010, Sky is relying on (i) the potential delayed impact of the 2009 initiatives; (ii) a new management team under Brian Sullivan, formerly of BSkyB; (iii) further marketing (albeit at a lower level than in 2009); and (iv) a greater push into HD, where Sky has 9 channels rising to 13. The new CEO is unlikely to embark straightaway on a major marketing drive, and the HD PVR box for satellite is not due until March (and that for cable until Q4). Despite the company’s optimism that good subscriber momentum in December may roll into Q1, we suspect early positive subscriber growth news is unlikely.”
The note says it is now time to take a breather on Sky-D. “The German consumer is notably frugal and as yet a mass market for premium pay TV is yet to develop, mirroring previous history of premium pay TV in Germany; (ii) Sky is launching at a time of relative strain for the German consumer; (iii) there is competition from Deutsche Telekom with IPTV Bundesliga; (iv)the cable operators in Germany and DT have developed triple play packages not offered by Sky; (v) Sky has suffered execution issues in H2 2009; (vi) Sky is working through high churn due to a residue of low paying subscribers in the base.”
© Rapid TV News 2010
