Private Investor: Murdoch circus act treads precariously on the high wire

In a sea of mostly blue arrows pointing satisfyingly upwards, there are a few blotches of red in my portfolio. Of course, the recent strong performance by the FTSE 250 - breaching all-time highs by the day - has helped all my mid caps, while the FTSE 100, with all those laggardly big companies, seems to be doing its best to try to catch up. But even this rising tide hasn't raised all my little boats.

The most disappointing performer has been British Sky Broadcasting. My modest holding in this company is worth precisely 10 per cent less than I paid for it; I have bought the shares gradually over the past couple of years. Even what seemed to be perfectly respectable performance figures on Wednesday couldn't shift the shares; and indeed, they were dropping back towards the end of the week.

All this, it seems, even after BSkyB managed to massage expectations for new subscriber numbers downwards. Still, at least I know what Arpu is - average revenue per unit (or subscriber), currently running at £386 per year. In other words, the average Sky customer spends almost £400 a year on some pretty dreadful television, and it costs Sky about £230 in marketing and advertising to hook each new recruit. Of these, about one in 10 will quit (the so-called "churn" rate).

Given that Sky wants "10 by 10", ie 10 million subscribers by 2010, compared with 7.6 million now, you can see the scale of the challenge. Quite apart from the the competition from Freeview, part-owned by Sky, broadband technology and goodness knows what next. So, as the chief executive, James Murdoch, remarked: "We never said it was going to be a cakewalk."

I managed to catch Mr Murdoch's only broadcast interview on his results - on BBC News 24's business show - where he was confronted by the BBC's business editor, Jeff Randall. Pity Sky News missed that one. Mr Randall was somewhat less combative than usual, but even taking account of the underarm bowling, Son of Dirty Digger gave a good account of himself. He has obviously learned from daddy that the only way to do well in a media business is by getting into the marketplace and grabbing the audience by the balls, after which their hearts, minds and wallets will follow. That means spraying money around, and that is just what Sky is now doing. Once you get that, and once you digest its riskiness, you understand what it's up to.

Which just leaves Sky's programming to sort out. I've seen Sky One and it isn't a pretty sight. Just think what folk might pay if BSkyB started putting some quality, home-grown, original programming on the air. Well, maybe not.

The only stuff that is worth the money is the Sky News channel (which can be picked up free elsewhere anyway) and, naturally, the Premiership football. Having watched last week's gripping Manchester United v Arsenal match on Sky in a packed pub, I can well understand the appeal.

Sky has got a grip on it for a couple more years yet, but it is a precarious thing. What if - a big if - the other broadcasters managed somehow to match Sky's bidding? What if the European Union's competition authorities do what they've been threatening to do and invade Sky's pitch?

What if the Premiership itself starts to buckle under the almost impossible economics of the football business, which seem to depend increasingly on the whims of Russian and Floridian oligarchs?

BSkyB has never been for the faint-hearted, and when you buy shares in it you are acutely ware of the Murdochs' 37 per cent stake in it. Never forget that Sky is the Murdochs' circus.


Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Alan Bennett has criticised the “repellent” reality shows which dominate our screens
tvBut he does like Stewart Lee
Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
David Moyes and Louis van Gaal
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Life and Style
food + drink
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
A cabin crew member photographed the devastation after one flight
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee / Experienced Recruitment Consultants

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

    Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Quantitative Risk Manager

    Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

    Day In a Page

    Secret politics of the weekly shop

    The politics of the weekly shop

    New app reveals political leanings of food companies
    Beam me up, Scottie!

    Beam me up, Scottie!

    Celebrity Trekkies from Alex Salmond to Barack Obama
    Beware Wet Paint: The ICA's latest ambitious exhibition

    Beware Wet Paint

    The ICA's latest ambitious exhibition
    Pink Floyd have produced some of rock's greatest ever album covers

    Pink Floyd have produced some of rock's greatest ever album covers

    Can 'The Endless River' carry on the tradition?
    Sanctuary for the suicidal

    Sanctuary for the suicidal

    One mother's story of how London charity Maytree helped her son with his depression
    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits