CEO Badmouths Rival as BSkyB Stock Price Slips on Subscriber Growth Fears

30 January 2002

Shares in Britain's sole satellite TV broadcaster BSkyB slipped 0.6% to £6.73 Tuesday in the wake of fears that the Murdoch-controlled operator will fail to hit subscriber targets when its interim figures are published February 8.

The concerns follow the leaking of private advice to investors by financial services giant Morgan Stanley that Sky will struggle to hit its ultimate target of seven million subscribers while in Q4 2001 it would add only 202,000 to its tally.

Sky’s own broker, Goldman Sachs, was marginally more optimistic, predicting its client would report a net subscriber increase of 217,000, “solid growth”, it opined, albeit leaving the broadcaster with “a lot to do”.

Nor was BSkyB’s share price helped by speculation that it would have to write-off its £1 billion investment in ailing German media company Kirch Gruppe.

All of which might explain why Sky’s combative ceo Tony Ball chose the high-profile ambience of the House of Commons to deflect the spotlight from his own company by badmouthing rival broadcaster ITV Digital.

Tony had a Ball, telling the Commons’ culture, media and sport select committee that ITV Digital’s management “couldn’t run a bath”. They had made a “spectacular list of mistakes” since the venture was launched in 1999 as ONdigital. “All their problems are of their own making … [and] will make a great business school case study some day,” he accused.

But had they listened to Sky, Ball implied, everything would have come up roses: “Sky was originally part of the [ONdigital] consortium, when it was called BDB. We had an idea of how to make it work and how to make it a complementary service to Sky and cable But the business model … was flawed. They tried to take on cable and satellite at what they are best at – offering lots of bandwidth, a wide choice of channels and interactivity.

Gleefully twisting the knife, Ball continued: “They also took on Sky Sports, instead of finding or creating a new market by attracting middle England. They peppered their limited spectrum with their own channels, like Carlton Food Network, instead of signing up channels people wanted to watch. And they took a conditional access system that's known to be flawed, so now they've got a piracy problem.

“You can make lists and lists of their mistakes,” he concluded. “I would be surprised if ITV Digital is there in its present form in a year's time. I would expect some changes in the consumer proposition. If I was running it, it would change.”

News source: