Sky rethinks Freeview exit and football strategy

Sky is to postpone plans to take its channels off Freeview and is considering showing football on Sky One, as part of its strategy to avert a £30m loss in advertising revenue because of its war with Virgin.

Sky Media bosses have held emergency talks with all the major media agency buying points, amid fears of a major hike in the cost of advertising with the sales house.

Led by managing director, Nick Milligan, who is widely speculated to be leaving the company in the Spring, they have already seen the renegotiation of several major sponsorship deals on Sky, including Domino's sponsorship of The Simpson's, Nissan's backing of 24 and 118 118's association with Lost.

Sky Media has offered a string of sponsors replacement airtime on other shows in its  portfolio, to make up for the loss of 3.35 million cable households, which could see it lose £2m in sponsorship alone.

However, the talks are believed to have helped avert any major withdrawal of spot advertising revenue from Sky in the short term, despite the sale house losing 7% of its total impacts on the back of the move to pull the likes of Sky One, Sky News and Sky Sports News from the cable platform.

Industry sources believe Sky will be forced to shelve plans, in the short term at least, to remove its Sky Three, Sky News and Sky Sports News channels from Freeview, which would wipe another three per cent off Sky Media's impacts.

Industry bosses also predict Sky will invest heavily in Sky One's schedule in a bid to claw back impacts by the time of the next trading season, and there is speculation that it will start showing premium content such as major movies and sports events, possibly even including Premiership football, on the channel.

For full analysis of the battle between Sky and Virgin Media, see the latest issue of Media Week, out tomorrow (6 March).

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