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The BBC wants to stop paying Sky ten million pounds a year for EPG listing

A few weeks after I brought the subject up, the BBC have announced that their supply of programming and EPG information to Sky should be free, because the public service channels are more than half of what people actually watch on Sky.

A few weeks after I brought the subject up, the BBC have announ
published on UK Free TV

Six weeks ago I wrote a an article about how much the BBC is Paying Sky for free public service television channels

Today on The Media Show: BBC savings strategy (see 17:30) the BBC have announced they are not going to put up with it.

Below is a transcript of the two interviews from the programme between award-winning Steve Hewlett and the BBC's John Tate and consultant Matthew Horsman from Mediatique.

Steve Hewlett: The BBC and Sky look set to fall out over something else, BBC strategy chief told us in that interview. The BBC has commissioned a firm of consultants to look at what the corporation pays sky to carry BBC channels on the sky platform.

The report recons it is about ten million pounds a year that a) takes no account of the value of having the BBC channels there in the first place and b) is unlike the position in comparable market where they say that other cable satellite and other platform operators pay so called retransmission fees to free to air broadcasters for the right to carry their channels

This is what John Tate told me

John Tate: I think sky does excellent job they have taken a lot of risks and they are putting money into UK original content they increasing that money and I welcome that I think however in the context of a very tight licence fee settlement payment from us to them for retransmitting what are to them are highly valuable services is not appropriate.

SH: so is that now the BBC's formal position going into the communications act?

JT: well we said some time ago, the dg said quite clearly this areas needs looking at. And I think the other public service broadcasters channel four and five and ITV would also want it looking at.

SH: Have you discussed it with them?

JT: Yes, we have discussed it with them. I think we would all agree that the current system is an anomaly. You know, various measures were taken to get satellite started in the UK, and this was one of them and satellite is very healthy and they are making billions of pounds every year and next to that profitability and our constrained licence fee we need to look again at this particular concession.

SH: Will you want the government to legislate that you no longer have to pay sky and virgin for carriage?

JT: You could consider it deregulation, in the sense of allowing an open conversation to take place

SH: why can't this just be done by normal commercial negotiation? If the value to sky is as significant as you say it is from having BBC's channels on its platform and I can see why it might be they wouldn't want people exiting the sky platform to find BBC somewhere else, reducing the customer experience. If it is of value to sky as you say, merely threatening to take it away should produce a commercial outcome.

JT: That a good question. The government might want to consider if it should be left to a commercial conversation.

SH: Sky would say "if you are going to compel us to carry it pay us for doing it".

JT: I think if it were a commercial negotiation, the balance of advantage is to sky for taking those channels. That should be reflected in the arrangement. The dg has said we are not looking for payment in the case of the BBC, others can state their own positions, and we would look to not having to pay these retransmission fees.

SH: over the course of the licence fee settlement between now and 2017, if this change was to be enacted as you and the other public service broadcasters want, how much revenue it save the BBC?

JT: It is the equivalent of not having to make the reductions in output local radio plus the reductions in BBC four to give you a service-related figure. Overall fifty million pounds over the period.

SH:And what would you do with the fifty million pounds if you had it back.

JT: We could mitigate the cuts I have just described - we would not have to make them.

SH: In our earlier discussion some of these cuts sound like good sense in any event.

JT: I have been very clear that there are cuts in outputs that we would not have made but for the new licence fee settlement and it are those areas that the money we pay sky to broadcast our channels could be put to much better use.

SH: ten million pounds a year minimum could be spend on local radio and BBC four. So is he right or is his playing politics? Sky were unable to join us but they gave us this statement:

"The BBC chooses to buy platform services that enable it to provide a wide variety of services on the satellite platform. As with any broadcaster that uses our platform we ask for a 'fair and proportionate' contribution to its running costs. Of course if the BBC no longer wants to buy these services from us, it is free to stop doing so at any point, but these are legitimate costs which are regulated by Ofcom. All broadcasters who choose to use platform pay them. We don't see the BBC as being the exception to this principle, no one expect the national grid to provide the BBC with cheap electricity subsidized by its other customers so why is sky any different?"

Matthew Horsman is a man who understands these things. Can you in "idiots guide" terms explain what this ten million pounds?

Matthew Horseman: The ten million pounds is the charge that Sky makes to ensure that the right BBC service is in the right region of the country - SO that is the starting point.

SH: SO all the BBC one regions are all carried on sky?

MH: they are all carried and wherever you happen to be in the country the set box will get the right service and in general it is a way of ensuing that the service gets from where the BBC gives it the transponder the uplink all the different things that go on technically and then it subsumed into the sky platform so anyone who has sky TV gets their BBC service on channel 101.

Sky BBC and ITV regions map
The twenty-million pound a year Sky map

SH: so why shouldn't the BBC pay for this?

MH: right now it has to and everyone does by the way, not the BBC all the mainstream public service broadcasting channels and indeed any channel that wants to go onto the sky platform that isn't retailed by sky, isn't part of the pay of the pay TV package that sky sells onto the consumer have to pay their share Ofcom has deemed to be an allowable recovery again sky's investment in the platform.

SH: but the argument from the BBC then that leave aside what is costs sky to host the BBC services that sky is paying nothing to reflect the value of those services to sky?

MH: here is where the BBC completely has a point. Sky's viewing for instance is pretty indicative of this. On the sky platform that has 400 channel services, the core public service broadcasters - BBC 1, 2, ITV1, channel 4 and channel 5 represent 50% - that's half - of all viewing in sky homes. If you add in the extension channels, BBC3, BBC4, ITV2, 3, 4 etc, it is more than 60%, so Sky obviously benefits a great deal from having the channels that people want to watch incorporated into its consumer boxes.

SH: all sky viewers are also licence fee payers, they have no choice but to do that this content is already paid for by sky's customers, so why shouldn't they get it "free" on sky as they do everywhere else.

MH: This comes to the larger point that Mr Tate was making in his comments the BBC is a bit different from the rest of the public service broadcasters, but look broadly why this argument has come up, and what Tate said other countries actually have a regime where free to air channels, give the US as an example, NBC, CBS, ABC those are all paid by cable operators to be retransmitted;

SH: in a nutshell - what is going to happen here?

MH: there needs to be some kind of guidance from the government either in the comms bill or as secondary legislation that says that sky is obliged to pay fees or the parties are commercially able to negotiate fees with the backstop of saying they still have access to the platform with appropriate prominence and "must carry" legislation in place. We think the end games is that sky will end up not being paid by the BBC and having to pay the other channels.

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Friday, 14 October 2011
Mark A.

8:32 PM
Haywards Heath

Saying that PSB stations would not have to pay, ...
Would this mean just BBC1, BBC2, ITV1, Channel 4 and 5.
So the BBC would still have to pay for BBC3, BBC4, BBC news ect.
ITV would pay for ITV2 etc
Channel 4 for More 4, Film 4 etc
Channel 5 for 5 star, 5USA etc.
If this includes all the PSB sub channels, would that include part owned channels like UKTV.
I can see a lot of gray areas here.
Sky would put up the price for the remaining stations and everybody would spent more money on lawyers.

I am in favour of the BBC saving this money and spending it on better programs.
I just hope this saves them some money and dose not cost them more on layers and increased charges with any non PSB channels.

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Mark A.'s 368 posts GB
Saturday, 15 October 2011
Steve P

1:26 AM

Mark A - IIUC no-one NEEDS to be on the Sky EPG as they can go on the Freesat one for very little.

BBC can simply say "Unless you list all our stations for free we are happy to go unlisted"

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Steve P's 1,172 posts GB
Mike Dimmick

7:12 AM

Steve P: As I recall, Sky+ cannot perform scheduled recordings from channels in the 'Other Channels' selection, which viewers would have to tune in manually if the BBC were to move off the EPG.

It's a bit of a legal grey area, because the Communications Act 2003 (IIRC) requires the EPG provider to carry the public-service channels, but doesn't say anything about charges.

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Mike Dimmick's 2,486 posts GB

8:01 AM

Mark A.: As far as I understand it, all channels from the BBC, ITV plc, STV, UTV, Channel 4 and Channel 5 are regarded as "public service" in this regard - they account for almost three quarters of viewing on the Sky platform.

It is worth noting that Sky made profits last year of £1,073m last year, so they wouldn't need to put up their charges to anyone if they didn't have to charge the BBC £10m - it is 0.93% of Sky's profits.

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Briantist's 38,844 posts GB
Shaun Hollingworth
11:51 AM

I don't know how Sky can justify wanting MILLIONS of pounds a year for providing a few bytes on an EPG guide. Some newspaper articles on this are not very clear at all. As poined out on here, Sky does NOT retransmit the BBC programs. They just enable their boxes to be able to easily receive them, and provide an EPG.

They should consider it an honour to be able to do this, for the benefit of their paying (heavily paying) customers, (of which I am one) and the benefits of being able to provide a "one stop" platform. which receives virtually all British channels.

Sky wouldn't be half as popular if folk had also to use other equipment to receive the BBC channels or switch over to other equipment when they wanted to watch the BBC or see what was on it.

Sky was only considered a "full" reception solution, when ITV finally joined its EPG.

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Shaun Hollingworth's 3 posts GB

11:58 AM

Shaun Hollingworth: 'Sky was only considered a "full" reception solution, when ITV finally joined its EPG. '

This was partly down to ONdigital being backed by two ITV companies, of course.

The funny thing, of course, is that ITV1 was also late to the ONdigital platform, it didn't appear correctly at launch...

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Briantist's 38,844 posts GB
Sunday, 16 October 2011
9:30 AM

Was not the original plan for ITV not to go with Sky, but they were losing so much in advertising value and viewers, that had to admit they 'needed' to be on board with Sky?

If the Beeb / ITV wish to use Sky as an point of contact, then there is no reason why they should not pay, are we saying that sky subscribers should subsidise the BBC ?

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Steve's 1 post EU
Les Nicol

10:50 AM

Steve -Well if anyone's getting a free ride it has to be SKY in that they are re-broadcasting content from the BBC without payment! The BBC unfortunately is required by dated legal constraints as earlier pointed out and not through choice. SKY would expect their content to be paid for by the BBC were they to be re-broadcasting Sky's programming.

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Les Nicol's 991 posts GB
Steve P

1:14 PM

Les - it has been explained here that Sky DO NOT actually broadcast BBC channels at all. The BBC pays the satellite owners to do that.

All that is under discussion is Sky including BBC in THEIR EPG; as distinct from the Freesat EPG.

Seems to me that Sky gets more out of it than BBC, as it allows them to appear to offer BBC as part of their subscription service.

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Steve P's 1,172 posts GB
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