MEDIA FORUM: Programming first, advertisers tell Sky

What should be the top priorities for Sky's incoming chief executive, James Murdoch? Alasdair Reid investigates.

There's likely to be a significant change in management style at BSkyB under its new chief executive, James Murdoch. Big deal, you say.

A change in personnel obviously implies a change in style. But the point here is that there's scope for a huge shift - because the outgoing chief executive, Tony Ball, operated at one extreme end of the management spectrum.

And let's acknowledge at the outset just how effective he was. Driving penetration of Sky Digital towards the seven million mark is no small achievement. But let's also acknowledge that Ball was dictatorial in style. By all accounts, he kept the various component parts of the business in hermetically sealed silos. According to insiders, there was little scope for a collegiate approach or cross-fertilisation of ideas and there was little in the way of delegation either. No important meeting could take place without Ball being there.

It can be a terribly effective way of going about things when you're pursuing a business-as-warfare model - but creative, ideas-based companies usually need to come out of the bunker at some stage.

What would the market like to see from the new chief executive? Should it be steady as she goes or should there be ambitious new growth targets?

And should Sky - not least in the content side of things - be more accommodating to the wishes of advertisers?

Andy Duncan, the BBC's director of marketing, communications and audiences, is ideally placed to comment. He's also on the board of Freeview, the free-to-air terrestrial TV platform - and although BSkyB is a joint venture partner with the BBC in Freeview, the platform is in reality a competitor to Sky. Many believe that Freeview is the only digital platform with any real growth prospects for the foreseeable future.

Does Duncan see it that way? "No, not really," he responds. "It's true, though, that the big picture point to be made here is about whether we can continue to get overall growth in digital in this country. The aim is a fully digital Britain. Obviously, there are some that want to go the pay-TV route and others who will opt for the free route. But I don't think that's the only issue that Sky faces. There's ARPU (average revenue per user: Sky's aim is to push it up rapidly from its current level of £366 per annum to more than £400), there's content and there's the whole issue of broadband. But it would be wrong to say that there is limited growth potential (in terms of subscriber numbers). And I actually think that the existing target of eight million by 2005 is an aggressive one, especially when you consider possible churn rates."

Oliver Cleaver, the European media director of Kimberly-Clark, has great admiration for all that Sky has achieved, but he laments the fact that advertising isn't its greatest priority. He comments: "Male brands will be happy with the package but if you take Sky One, for instance, there has been a significant decline in housewife impacts and it doesn't help that there are constant interruptions for sports channels promos. Car advertisers may like to see that, but those promos don't mix well with ads aimed at housewives. Some advertisers have a bit of a rocky time with Sky One. It has been a disappointment - and now it isn't growing as fast as the spin-offs from terrestrial channels. Sky One wasn't top of Dawn Airey's priorities when she first went to Sky. Now, I think it is."

Kelly Clark, the chief executive of MindShare, points out that there's no shortage of programming expertise at Sky - James Murdoch also had a decent track record in programme development in his previous role at Star in the Far East and his skills will complement those of Airey. But Clark believes that there should be more subtle items on the agenda. "There's also huge opportunity if they find a way to work with advertisers to capitalise on their attractive audiences, interactivity and the rich seams of subscriber information they collect. They still haven't joined all that up for maximum effect. There's a goldmine waiting if they do," he argues.

Antony Young, the chief executive of ZenithOptimedia, says the challenge is quite simple. "What does a new chief executive at BSkyB need to do from an advertiser's perspective? Fix Sky One. What our clients need is an alternative general entertainment format that will attract competitive broad demographic ratings. It needs to do better. That's going to help us to recommend the network and challenge for a bigger share of advertiser budgets," he concludes.

So more focus on advertiser needs and fix Sky One is the clear message to Murdoch Junior.

- "Where content is concerned, it's only natural that it will want to strengthen its channels as time goes on. It will be generating more cash than it has previously and Sky will possibly want to spend more on programming." - Andy Duncan director of marketing, communications and audiences, BBC

- "The question is, do they care enough about Sky One? It's interesting to see the list of programmes they've turned down recently, including things like '24'. Will that change? We admire it as a business but some advertisers are not best friends with Sky." - Oliver Cleaver European media director, Kimberly-Clark

- "The biggest challenge we see for Sky is distribution - maintaining subscriber growth momentum. Programming is a worry but we have confidence that Dawn Airey will sort that and James had a track record of investing in great programmes at Star in Asia." - Kelly Clark chief executive, MindShare

- "Star TV in Asia was run very much with an advertising business model and they were successful in bringing on new formats. James Murdoch isn't a programming person by nature but I think he's a good manager of creative talent. He's a safe pair of hands." - Antony Young chief executive, ZenithOptimedia.

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