Premier deal to lift BSkyB rates

Football sees the bigger picture - at a price for viewers

BSKYB subscribers are set to see the cost of watching their favourite Premier League matches rise by up to pounds 5 a month when the station's new four year pounds 670m TV football contract comes into force next year.

The price rise, the industry believes, will be needed to offset programming costs, which will spiral from around pounds 400m this year to more than pounds 600m in 1998, the first full year of the new deal.

Unfortunately for BSkyB, its desire to put parts of its sports coverage on a pay-per-view basis were put on hold by the Premier League in last week's deal, which saw off competition from United News & Media and a Carlton/Mirror Group consortium.

Pay-per-view will not be considered again until two years into the contract, or the 1998-99 season, a Premier League spokesman said.

The stakes for BSkyB are high. Until now it has built a successful market largely via sport. As of March, it had over 5 million subscribers, one in five of British households, with pounds 950m of turnover predicted this year. That has spurred the shares to reach new heights, valuing the company at pounds 7.5bn and earning managing director Sam Chisholm pounds 4.7m last year.

To maintain profits without increasing prices, BSkyB would have to add another million subscribers, according to analysts, and keep its current mix of highly profitable satellite-based subscriptions, 80 per cent of the total. Most growth to come will be from cable, however, meaning even more subscriptions will be needed just to stand still.

More likely, it will seek to squeeze more revenue from its existing base, which has proven surprisingly resilient with price rises in the past.

Without pay-per-view, BSkyB will not be able to charge large premiums for a top game like Manchester United-Liverpool, to ease the burden.

Its first foray, the pay-per-view fight between Frank Bruno and Mike Tyson generated an average pounds 5 an hour per subscriber - triple the level under monthly subscriptions

In a way BSkyB has been trapped by its own success, needing to keep the Premier League to retain its customer base, yet at the same time outbidding copycats. Last week, it had to trump a bid of pounds 1.5bn over 10 years from United's Lord Hollick .

Doubts are also rife over whether it can add many more subscribers using football, especially since the BBC will retain rights to show highlights on Match of the Day.

"The only way they could grow their business was to get exclusive rights, and that wasn't possible in the current political climate," said a source from one media rival.

However, analyst Dennis Exton of Nikko Europe believes it would be foolish to write its chances off. "They must have been damn confident to bid this sort of money," he says, "and they've proven that they can pull rabbits out of hats in the past."

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue