Sky’s new owner thinks it has a se­cret weapon to fight the stream­ers

The Observer - - Analysis -

Sky’s de­par­ture from the FTSE 100 last week sig­nalled the end of al­most three decades of Mur­doch con­trol and has set the scene for its new owner, Com­cast, to grap­ple with a big strate­gic chal­lenge: the rise of stream­ing ser­vices. Com­cast’s boss, Brian Roberts, has pledged to avoid med­dling with the new acquisition – Com­cast may be the big­gest ca­ble op­er­a­tor in the US, but it has zero Euro­pean payTV ex­pe­ri­ence – but he has ad­mit­ted that one Sky jewel has caught his at­ten­tion. Now TV, an on-de­mand stream­ing ser­vice, is Sky’s ri­poste to Net­flix and Roberts be­lieves it could be­come a global prod­uct.

Roberts failed with his ini­tial stream­ing ef­fort, Watch­able. Since then he has sat on the side­lines while the likes of Dis­ney and AT&T, the owner of Warner, have joined the stream­ing bat­tle against Net­flix and Ama­zon.

Now TV has about 1.5 mil­lion UK sub­scribers, which is hardly a threat to Net­flix’s near-10 mil­lion, but it is be­ing used as a spring­board into Euro­pean mar­kets, such as Spain, that do not have a Sky sub­sidiary. The world might fol­low.

The stream­ing com­pe­ti­tion also threat­ens a cor­ner­stone of Sky’s busi­ness: con­tent. Sky’s con­tent deal with Dis­ney ex­pires in 2020 and the Hollywood gi­ant has con­sid­er­able lever­age af­ter it ac­quired Mur­doch’s Fox this year. If Dis­ney’s plans for its own US stream­ing ser­vice prove wildly suc­cess­ful, it may look to pull its con­tent from Sky to bol­ster its own in­ter­na­tional am­bi­tions. How­ever, that would be a very big call, given its con­tent is viewed in 23 mil­lion Sky homes across Europe.

At least one thing off the “to-do” list ap­pears to be the three-year cy­cle of worry that is the Premier League. BT has raised the white flag in the bid­ding wars for foot­ball rights and there is no se­ri­ous com­pe­ti­tion else­where. Stream­ing, how­ever, is a dif­fer­ent ball game.

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