BT takes a gamble and pushes ahead with package cuts
Friday 30 April 2010
BT will stick to its pledge to slash the fees it charges customers to watch Sky Sports in a multimillion-pound gamble that BSkyB will lose its appeal.
Virgin Media and Top Up TV, who will also be providing customers with the service, are as yet undecided on their pricing policies for the service.
The telecoms giant has long sought to add Sky Sports 1 and 2 to its pay-TV roster on BT Vision, and earlier this year said it would undercut rivals with fees as low as £15 a month for some packages. While yesterday's deal between BSkyB and Ofcom means BT Vision can show live Premier League games for the first time next season, along with Virgin and Top Up, it currently still has to pay the full price on the rate card.
The difference between that and the proposed lower price will be put in escrow. If BSkyB's appeal over Ofcom's original ruling is successful, the companies will have the money returned.
A spokesman for BT said: "We are going to take the gamble that Sky loses its appeal." The sum will change depending on the number of customers, but there is expected to be more than £10m in escrow by the ruling, one source close to the process said. He added: "We are on the same page that we were when Ofcom announced its original ruling. Our pricing plans won't be affected unless Sky wins. For this season we will be offering customers a lower price."
A source close to BSkyB said: "Retail pricing is their concern. If they do it before the outcome of the appeal is known, on their own heads be it."
Virgin Media already offers Sky Sports packages, but insiders say it currently provides the service at a loss.
Neil Berkett, the chief executive, has previously declared that Virgin Media will look at cutting costs for the service, but yesterday the company said it would wait to see the rate at which Sky offers its HD sports channels before committing to lower prices. Unveiling Virgin Media's quarterly results on Wednesday, Mr Berkett said the HD channels would bring in more customers. Sky said it would offer Sky Sports HD at "commercial terms".
Nick Markham, the boss of Top Up TV, said the company had yet to decide a pricing structure. "We need to sit down and ask ourselves if we want to gamble," he said. Top Up hopes to have the service ready a month before the Premier League kicks off.
"We want a bit of a run-up," Mr Markham said. "It'll be good to tell people about it during the World Cup when everyone is talking about football."
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