LONDON: A witches brew of recession and regulation has slowed the seemingly inexorable growth of BSkyB, the NewsCorp-controlled British satellite services juggernaut. As a result, Sky will fail to meet its much-trumpeted target of ten million subscribers by the end of 2010.
So concludes a report published Friday by independent investment banker Collins Stewart.
It predicts a target shortfall of 600,000, citing "recession, technology shift and regulation [that] could together combine to make the perfect storm" culminating in "greater threats to [Sky's] business model than ever before."
The report coincides with research published last week suggesting an overall decline in British pay-TV services.
If this is so, opines Collins Stewart, BSkyB's average revenue per user is likely to plummet, leading to a potentially dangerous decline in profitability.
Moreover, the recent intervention by UK communications regulator Ofcom is likely to exacerbate an already volatile situation.
A ruling by the watchdog, published in September, found that that BSkyB exerted "market power" over televised soccer and Hollywood movies – a situation since put-out to industry and public consultation.
An adverse outcome to the consultation could see BSkyB facing "greater threats to its business model than ever before," warns Collins Stewart.
"By then  the UK may be mid-recession, Ofcom should conclude its potentially damaging pay-TV review and BSkyB will be riding the uncertainty of the next Premier League [soccer] rights auction."
These factors could impact adversely on the satellite giant "as early as next spring", the bank believes, impelling it to downgrade BSkyB's 2010 earnings forecast by 30%.
Invited to comment on Collins Stewart's prognosis, BSkyB was uncommunicative: "We will be reporting our first quarter results on October 31. Consequently we are in a closed period and unable to make any comment," said a spokesman, exhaling with relief.
Data sourced from Guardian.co.uk; additional content by WARC staff