The war of words between BT and BSkyB over television rights and advertising has intensified. BSkyB described BT as a ‘£22bn gorilla in puppy’s clothing’ in response to BT’s claim that it was like a small dog against the BSkyB ‘rottweiler’. It is possible, however, that consumers could benefit from a price war.
The war of words between BT and BSkyB over television rights and advertising has intensified. BSkyB described BT as a ‘£22bn gorilla in puppy’s clothing’ in response to BT’s claim that it was like a small dog against the BSkyB ‘rottweiler’. It is possible, however, that consumers could benefit from a price war.
Despite having a market capitalisation half as big again as that of BSkyB, BT is a new entrant in the world of broadcasting. Others have tried to challenge the dominant player and have come away with their fingers burnt. However, BT is worried about BSkyB encroaching on its broadband market and hopes to sell to customers a combined package of landline, broadband and BT Vision.
BT Vision is also being sold to existing BT customers who are being urged to take the new Infinity broadband package. The standard service does seem to be having increasing problems, dropping off for a minute or two and then returning which means that in the meantime work has been lost. Living in an area where satellite dishes are banned by the local council, it would be nice if BT could get their act together.
BT had discussed wholesaling sports rights to BSkyB so that sports fans who already had a subscription to the satellite broadcaster would be able to get BT’s sports content as well, with no additional charge. However, the companies could not agree on terms.
BT has claimed that it was willing to share its content with BSkyB, but that BSkyB was not willing to make a two-way deal, handing BT some of its premium sports rights in return. For its part BSkyB claims that BT is the one refusing to share content.
BT has complained to Ofcom about BSkyB’s refusal to air a multi-million pound campaign for BT’s Premier League football coverage. John Petter, managing director of BT’s retail division, accused BSkyB of behaving ‘like a rottweiler running away from a new born puppy.’ Graham McWilliam, BSkyB’s director of corporate affairs, responded with a letter to the Daily Telegraph, arguing that BT would do well to ‘look at its own double standards.’
Analysts predict a price war between the two companies which would eat into their margins but benefit consumers. BSkyB increased its prices last autumn after a two year price freeze. The real winner could be pubs, which typically pay a few hundred pounds a month. BT plans to offer a cut-price alternative, accessible over their old BSkyB set-top boxes. They will also provide the equipment if a pub doesn’t have them.
The commercial battle between the two firms was certainly one of the factors behind next season’s enhanced television deal.