The Great Debate UK
Ofcom summons up courage to tackle BSkyB
- Steven Barnett is professor of communications at the University of Westminster, and a writer and commentator on broadcasting issues. His first book, published in 1990, was on the relationship between television and sport. The opinions expressed are his own.-
Today is a historic day for British television: the first time in its brief six-year history that the supposedly uber powerful Ofcom has been prepared to flex its muscles to tackle the brute force of BSkyB’s overwhelming dominance in pay television.
It is an issue that has blighted the television industry for years, disadvantaged consumers, put companies out of business, and sent competitors, regulators and politicians running for cover.
Finally, after three years of exhaustive analysis, the regulator has had enough: BSkyB has been ordered to lower the prices at which it sells its premium rate channels to other platform operators such as Virgin and BT.
Consumers may even be able to buy sports and movie channels without being forced to pay for a bundle of countless other unwanted channels.
We can now expect a blaze of carefully orchestrated outrage not just from the hugely influential head of BSkyB itself, James Murdoch, but from its formidable number of friends and allies. For the power and influence which this single corporation exerts on British public and political life is quite extraordinary.
We have already heard the first rumblings from powerful sports bodies, threatening legal action and warning of “serious consequences” for sport.
Why BT’s pension line is out of order
– Neil Collins is a Reuters columnist. The views expressed are his own –
It is a quarter of a century since the ground-breaking privatisation of BT. Unfortunately, it may not be many more years before a reluctant government is forced to take the company back into state ownership.
The new BT annual report, 169 pages of it, gives only a few hints of the scale of the problem facing what John Ralfe recently described as “a badly run hedge fund that happens to own a phone network”.
Ralfe is an independent consultant and something of a maverick in the arcane world of pension deficits, but he has a point. The directors claim that BT will make enough to grow the (reduced) dividend, invest in the business and support the pension scheme, all at once. It’s far from clear how.
The real horrors are in note 29 to the accounts. The BT Pension Scheme was closed to new entrants eight years ago, but it is still a millstone around the company’s neck, with an estimated present value of its liabilities at 33 billion pounds.
This is marginally down from the 2008 figure. Unfortunately, the value of the fund available to meet the liabilities has slumped from 37 billion to 29 billion pounds, as the managers scrambled to rebalance the fund away from equities in a falling market.
Ralfe reckons the true position is much worse, because BT’s retired engineers are going to live longer, and the rate at which future liabilities are discounted is “wishful thinking”. On his sums, the deficit is 11 billion pounds — half as much again as BT’s current market value.
BT must be more efficient
- David Kuo is director at The Motley Fool. The opinions expressed are his own.-
BT’s annual results were expected to be bad. It turns out that they weren’t just bad – they were awful.
Now, many of us were expecting massive losses, a slashing of dividends, the axing of jobs and a gaping hole in the company’s pension fund. And BT duly delivered on all fronts.
Thanks to a dreadful year from BT Global Services (which handles network services for large businesses), the company announced an annual loss of 134 million pounds after having taken a painful 1.3 billion pound write-down from that unit (a big chunk of which was due to a single IT contract with the NHS). So they’ve taken the losses on the chin and got rid of the bosses.
Meanwhile, BT’s dividend has been at the forefront of many investors’ minds, with the company having enjoyed an enviable track record of steadily rising dividends since its crisis year of 2001. But fears were today realised with a near 60 percent cut. The full-year dividend has been slashed from last year’s 15.8 pence to just 6.5 pence.
Over in the pensions department, it’s been a dreadful year too. This past year has seen its fund reduced from a 2 billion pound net surplus last year to a 2.9 billion pound deficit this year – 2.9 billion pounds is a hefty hole to fill, and BT is planning to increase its pension fund contributions to 525 million pounds a year over the next three years.
Finally, with 15,000 jobs having already been lost in the 2008-09 year, a further 10,000 redundancies were expected to be announced for the coming year. But the jobs picture has turned out worse than that, with 15,000 now expected to go. BT hopes that most of those will go through natural wastage and voluntary redundancies, and that no compulsory redundancies will be needed.
BT needs to get its house in order and perhaps it will see greater financial gains. It is difficult to imagine a less efficient company. I am sorry for those who have lost their jobs.
Where I live in North Wales I am unable to get Freeview, so that means I have to subscribe to Sky. Well, if I want more than the basics I have to pay, yet the variety of Freeview stations exceed the stations on Sky unless I am a paid up subscriber! For example Dave is free to air on Freeview and yet on Sky I have to pay.
I could go for FreeSat, but that would involve me splashing out on another box, but again, the channels are limited and I have no option for additional services, so Sky does provide a service, but sadly for the TV that I watch, I am paying through the nose.
What grieves me more is if I was to unsubscribe from Sky (since I have a Sky+ box) if I wanted to use the recording facility on the box that I bought, I have to pay £10 a month! In short, they have me over the metaphorical barrel.
I would welcome a package that allows me to pay for what I watch, say like an electric metre, where you pay per hour. For a 30 day month (at £18 a month) that would equate to 2.5 pence an hour of television viewing, I suppose for prime time viewing, films, sports, they could charge more, say 5 pence a hour… (?)
As for the recording facility, I own the machine, so why should I pay for that? It just like owning a VCR, just a digital version. – That’s what I was told by a Sky employee. Any thoughts there?
I will not pay an extra £10 a month for HD, that’s absurd, nor will I subscribe to Sky’s upcoming 3D service. It’s only TV at the end of the day.
It’s about time Ofcom intervened, some people don’t get a choice of alternative suppliers for TV, telecommunications or broadband without being subjet to additional fees.