Sky’s American owner Comcast is reportedly looking for further cuts, some Sky channels could be closed.
It follows a reduction in Sky’s total number of subscribers earlier this year, with the business bracing itself for further cancellations as the cost of living crisis bites.
Comcast wants Sky to become a bigger triple-play (broadband, phone and TV) provider alongside becoming a technological gatekeeper to content, so it is not as reliant on pay TV subscriptions. By offering bundles and add-ons, it hopes to increase revenue per customer.
A reduction in subscribers is coupled with a downturn in advertising revenue. Last month, a survey found two thirds of UK advertisers would be cutting TV ad spend.
But Sky has also been forced to invest heavily in new drama and factual content that will fill TV schedules with original programmes in the coming years. Sky previously relied on buying in shows, ranging from The Simpsons to Game of Thrones – but these are now part of rival media companies.
Sky is also investing in its own children’s programmes with the launch of a Sky Kids linear channel next year. This follows the sale of its 40% stake in Nickelodeon UK in October to Paramount Global.
Sky Sports Cut?
Sky Sports restructured to its current form in 2017, moving from numbered to monothematic channels. Across its eleven channel portfolio, Sky Sports Main Event is responsible for simulcasting a pick of live coverage from the remaining 10 channels.
But the broadcaster faces increased competition from the new BT – Warner Bros Discovery joint venture as well as from Amazon Prime and Viaplay.
Dedicated sports channels mean Sky has to retain sufficient broadcast rights to fill channel schedules 24/7. The flexibility to show different sports on the same channel at different times of the day is lost.
Matt Hughes, Chief Sports Reporter at the Mail reports this weekend that Sky is currently “considering” reducing the number of its channels following pressure from Comcast, with some Sky Sport channels now seen as “vulnerable”.
Meanwhile, in a Sunday Times interview, Paramount Global boss Bob Bakish said the company will take an “opportunistic” approach with regards acquiring sports rights for Paramount+ in the UK, potentially squeezing Sky further. Paramount+ doesn’t currently offer sport in the UK.
Sky Germany
Comcast is meanwhile reportedly close to selling its German offshoot, which also operates in Austria.
Sky’s failure to become a triple play provider in both countries is understood to have convinced Comcast to offload Sky Germany.
As of Saturday evening, Vivendi’s Canal+ and United Internet (1&1, Ionos) are currently linked to the sale. Operating as a consortium, Canal+ brings its experience of pay TV. United Internet brings mobile and fixed broadband services to the table. Protracted discussions are ongoing and there are doubts that Comcast will raise as much from the sale as it was hoping.
SD channel closure
Sky UK/Ireland still operates standard definition versions of its channels, unlike its continental counterparts.
After testing the water earlier this year with the closure of three SD Sky Cinema channels, Sky is expected to close further SD channels, further cutting distribution costs. Sky Cinema and Sky Sports subscriptions already include HD. In theory this means SD versions could be cut more easily than on Sky’s Entertainment channels, where HD access is part of an add-on.
Sky SD and +1 channels never launched on Sky Glass and Sky Stream, where all Sky-branded channels are HD by default.
Meanwhile, the BBC has launched its own SD channel closure programme on Sky. It will close the last remaining SD services in early 2024 after migrating all remaining SD-only channels to HD next year. Services from other broadcasters are also understood to be heading towards a future switch to HD-only.
Sky has multiple contracts with satellite operator SES that run until 2027 and 2028. This secures its satellite TV service for the next five years. But Sky is aggressively pushing its internet-based Sky Glass and Sky Stream platform, a move that will ultimately enable Sky to cut satellite distribution completely.