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 [2010] 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; additional content by WARC staff