Sky is the crown jewel of the UK’s world-class creative sector.
When it was sold to US cable giant Comcast in 2018, the price of the deal reached an astonishing £31 billion following a tumultuous battle between founder Rupert Murdoch’s Fox empire and Disney.
There was a big wave of optimism about the broadcaster’s future, with the new owner, Brian Roberts, enthusiastic about Sky technology.
In an interview with the Daily Mail, Roberts, the son of Comcast founder Ralph J Roberts, vowed to “do no harm to Sky” and praised its technology, which he said was better than that in the US.
Still up for the job? Sky is still home to hits like Succession, but since taking over five years ago it’s become part of a Comcast weighed down by £74bn in debt
The new owners committed to invest £3bn in a 32 acre 14 stage film and video production site in Elstree, Hertfordshire.
The ambition may still be there, but five years later Sky has become an orphan in the vast Comcast universe. The American behemoth is weighed down by £74bn in debt and must make massive repayments over the next 12 months.
A former executive who knows Sky well told me, “Comcast paid way too much. It can no longer invest in innovation.’
And as a result, Sky has “lost its mojo.”
Along with the UK’s other major media and telecom companies, cost cuts are on the way, with an unknown percentage of the group’s 34,000 employees reportedly losing jobs. Being part of a debt-laden, family-controlled media group proves less comfortable than when the Murdoch family was at the helm.
Wall Street writer William Cohan recently wrote of Comcast that he saw “problems arise” because of an ownership structure “in which family voting rights outweigh beneficial ownership, leading to financially foolish, even bizarre, behavior.”
Sky’s overheated, debt-fuelled takeover, which threatens Comcast’s stability, fits that pattern.
Comcast CEO Brian Roberts with Aileen Roberts at the annual Academy Awards
Comcast’s great hopes of pushing Sky’s boundaries across Europe through Sky’s ownership in Germany and Italy never materialized.
Technological incompatibilities, coupled with the dominance of British manufacturing and creative talent, doomed the European plan from the start.
Instead of adding value, Comcast is trying to sell its troubled Sky German business and relieve its balance sheet.
In autumn 2022, it wrote down the value of its European acquisition by a whopping £6.7bn, leaving the group with a paper loss of £3.6bn.
The loss of ambition was evident from almost day one of Comcast’s ownership. Key to Sky’s genius under Murdoch had been a willingness to borrow, invest and take risks in new ventures.
But shortly after Comcast took charge, it scrapped a digital hub in central London’s bustling studio district of Soho, sacrificing a new family of sports and social media channels.
Failing to see the value of new-wave outlets reaching consumers directly through rousing social media shows a reckless lack of ambition.
That early, small signal of Comcast’s reluctance to experiment was an indication that being part of the cable giant, hit hard by so-called cord-cutting — a consumer preference for streaming over subscription services — in the US wasn’t a great place for Sky to be. returned to Earth.
An indication of distress is Sky’s decision to cut half of its football reporting team in a cost-cutting move, after wage cuts were demanded.
Veteran tunnel interviewer Geoff Shreeves was among those in attendance and stated, “There’s an old saying that you should always know the best time to leave, even at the biggest party.”
The idea of using football as a sacrificial lamb goes against everything Sky stands for.
Its huge satellite broadcast subscription base is built on Sky’s superior Premier League coverage and the billions of pounds it has paid for broadcast rights. In its most recent Premier League deal, it paid £4.2 billion for 126 games for the 2022 to 2025 seasons.
In May, it added to its dominance of coverage by signing a £935 million deal with the English Football League (EFL) to broadcast up to 1,000 games from the lower leagues each season.
There was recognition that streaming would allow access to the games closest to the fanbase.
But streaming and new technology have also proved to be a danger to Sky’s dominance. Amazon has quietly gobbled up some of the lesser Premier League fixtures not caught by BT and the DAZN sports platform. Enthusiasm in the US for Premier League football is on the rise, with room-to-wall coverage of almost every game on standard cable channels, weakening Sky’s grip and leaving a widow open to leaks.
Key to Sky’s success has been a willingness, under the control of the Murdoch family, to ignore critics and continue to innovate even when it confuses the markets.
Former CEO and Chairman James Murdoch held his ground, pouring resources into new technology such as Sky boxes, the advanced Q box, broadband and the ability to communicate with industry new entrants such as Netflix. Other content platforms have since been added.
Its pioneering approach and memorable programs meant that British competitors, including the BBC and ITV, were catching up with smaller resources.
But Comcast’s unlimited support is no longer guaranteed, despite launching new platforms Sky Glass and Sky Stream as it modernizes its intellectual property.
And while it has secured the Premier League rights and continues to reveal creative programming, Sky’s ability to compete is diminishing as its purchasing power shrinks.
The sale of Comcast assets, such as the attempted sale of Sky Deutschland, is a warning of tougher times ahead.
Comcast was “driven by hubris” when it bought Sky, a former Murdoch-era executive noted. Now it risks ‘self-harm’.
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