Media Forum: Is Sky One BSkyB's weakness?

As BSkyB considers new targets, is Sky One a cause for concern?

Someone must have been putting something in the sherry in Osterley over the past couple of weeks because BSkyB certainly had a feisty old festive season. Just before Christmas, it announced it had passed another milestone in subscriber growth, achieving its target - eight million by the end of 2005 - with days to spare.

Emboldened by this achievement, it promptly turned on the rival digital platform Freeview, saying it (Freeview, that is) was not fit to lead Britain into the digital TV future, describing it as "an analogue platform with not very convincing go-faster stripes" and accusing the BBC of abusing its public service duties when it favoured Freeview in its digital promotions.

It still had time later in the day to complete its £211 million takeover of easynet and create a new division, Sky Broadband, to house this and other web-based assets.

It was not finished yet, not by a long chalk. As the New Year dawned and with holiday overindulgence already a fading memory, it swung into action yet again with what may prove to be the most significant announcement of the lot - the appointment of Richard Woolfe as the head of Sky One.

This job has traditionally been the Bermuda Triangle of TV programming jobs; Sky One's performance has been at best patchy (it has been losing share for at least two years) and it has never found a distinctive positioning.

Woolfe, a veteran producer, may become a key figure as Sky contemplates its next target - ten million subscribers by 2010. Sky surely needs a broad-appeal, general entertainment flagship channel more than ever.

Andrew Constable, the head of media at Coors Brewers, likes the male-oriented demographic the platform traditionally offers but he agrees it would be great if Sky could make progress in other areas. But, he adds, don't ever bet against the company when it comes to business goals. He states: "In the past, every time BSkyB has come out with a target, there have been people who have said it will struggle to make it - but it has always achieved that target. So, until I see any evidence to the contrary, I have got to believe it will be close to the ten million figure it wants to achieve by 2010. It knows the market better than anyone."

Chris Hayward, the head of broadcast at ZenithOptimedia, tends to agree.

He comments: "It's a smart company, aware of its strengths, and it has the means to make things happen. But it's also true that the game has moved on in recent years. Previously, its dominance of multichannel was unquestioned but Freeview in particular has been much more of a challenge that anticipated. And because of its business model (its focus on subscription revenues), there perhaps hasn't been as much of a focus on the likes of Sky One as there might have been. Sky is not unaware of that. And, in truth, its programming hasn't been bad. But it needs to be marketed and scheduled and it needs to become a broader entertainment channel. It has to provide a stronger female appeal to balance Sky's sports output."

But Andy Jones, the joint chief executive of Universal McCann London, doesn't buy that argument at all. He explains: "As I see it, the subscription target and the performance of Sky One are two entirely different issues. BSkyB's proposition is that it offers a far broader range of channels than Freeview. And if Freeview starts to rival BSkyB, then it would just put Sky One on to the Freeview platform.

I really don't think it's a central issue. And we know the Sky platform will look very different in three or four years' time - for instance, it has just announced a tie-up with Microsoft (to develop a broadband video-on-demand service) that could have radical implications. For me, all of that puts the Sky One question into perspective."

Neil Johnston, the head of TV buying at OMD UK, agrees Sky could face more serious competition in the coming years but he doesn't think Sky One need be a problem - if it needs fixing, and it probably does, then it will be fixed. He concludes: "I believe Sky will have to do more with Sky One. It still does not have the feel of a flagship channel and while that remains the case, people will still think of BSkyB in terms of a delivery system. The two million people Sky needs to achieve its next target are not interested in sport - they are interested in high-quality traditional entertainment and reality TV. Sky One doesn't really excel at that."

MAYBE - Andrew Constable, head of media, Coors Brewers

"I don't think the full picture has emerged but if Sky loses (Premier League) exclusivity, it will find it harder to meet its next target. The environment is good for us but we'd be even happier if Sky One improved."

YES - Chris Hayward, head of broadcast, ZenithOptimedia

"The advertising community believes Sky One should be a lead channel in the multichannel environment. So it continues to give cause for concern and we would like to see a big improvement, not just a halt in its decline."

NO - Andy Jones, joint chief executive, Universal McCann

"The two biggest drivers of dish sales are technological - high-definition TV and Sky+. Sky+ is a phenomenally good product; there will be two million HDTV sets in UK homes by the end of 2006. Sky One is one channel among hundreds."

MAYBE - Neil Johnston, head of TV buying, OMD UK

"You could argue that Sky One needs to produce more great programmes and memorable TV. But BSkyB is cash-rich. It has bigger programme and marketing budgets than anyone. If it wanted to, it could buy the next two million homes."

- Got a view? E-mail us at campaign@haynet.com.