Sky vs pubs - the big clash
A meeting held earlier this week decided that Sky has gone too far. Adam Withrington reports.
The tagline to the latest Sky Sports advertisement is the Elton John-driven "Are you ready?" This is perhaps a question that both the pub trade and the satellite giant should be asking because battle lines are being drawn up.
The relationship between Sky and pubs, always testy, has now come to a head.
At a heated debate in Westminster last week, licensees, MPs and trade associations were unanimous in their verdict that Sky has gone too far and action is needed.
The current state of play
The meeting seemed to clearly show that the vast majority of pubs in the UK still want Sky. It provides a popular and good quality service to customers.
Vince Healy, managing director of Berkshire-based Ascot Inns, said at the meeting: "The variety of sports coverage available on Sky's three main sports channels is impressive and the quality of that coverage is good.
"I think that sport generally is now more exciting to watch, cameras seem to be everywhere, there is more access to the stars and it would be fair to credit Sky with being at the forefront of those improvements."
However recent price rises have meant that publicans and pub companies want Sky out. In June Sky announced that its subscription fees were going to rise by up to 22 per cent while the latest charge for Sky's season ticket was a rise of 100 per cent on last season.
Many licensees are no longer willing to pay and are beginning to question whether they want Sky at all. Stuart Neame, from Kent brewer Shepherd Neame, said: "We are going to act very aggressively with Sky over this. We are going to get rid of the service in most of our 70 managed pubs."
The problem
Simply getting rid of Sky is not the answer. Pubs need live football, culturally and financially.
According to Dr Rogan Taylor, director of the Football Institute at the Liverpool University School of Management, removing live football from pubs would damage an important culture that has built up over the last 10 years.
He said: "Live football in pubs has a cheap entrance fee - a pint of bitter. We shouldn't underestimate what the impact will be if live football is taken away."
Sky also gives financial impetus to the trade. As John Grogan MP, chairman of the All-Party Parliamentary Beer Group, put it last week: "Sky reinvented Monday nights with their live football coverage, it gave them a whole new meaning."
However, there is a growing feeling that Sky is turning its back on the pub market and instead is focusing on getting everyone who might go to the pub to watch the football to buy a Sky dish at home instead.
Dr Taylor said: "I've no doubt that the number-crunchers at Sky have realised that if all pubs get rid of Sky but everyone who can afford it gets it installed in their homes instead then they are still quids in."
Sky has also been widely criticised for not listening to its customers.
Vince Healy said at the meeting in Westminster: "Sky does not communicate with its customers and trying to speak to an employee, other than at a call centre, is impossible. A culture of bullying behaviour exists throughout Sky and does so only because it enjoys a monopoly in the market of premium sports broadcasting."
A spokesperson for the satellite operator said: "Sky continues to offer quality service and good value for money to our customers and we are always happy to speak to them directly regarding any issues they may have."
The solution
The solution lies with the trade being able to answer this question: how can the industry prove that the provision of "premium sports coverage" is a separate market?
This has become the fundamental point in this whole debate. The Office of Fair Trading (OFT) closed last year's investigation into Sky's alleged breach of competition laws by stating entertainment like karaoke, live music and pub quizzes stand as competition to sporting broadcasts in the same "entertainment in pubs" market.
In an analysis of its pricing policy in 2002, Sky wrote that its price rises were justified because there was evidence of customers "switching", meaning dividing their time at the pub between live football and other pursuits such as karaoke or darts. Sky believed that this "switching" demonstrated it was not in a dominant position.
Rob Hayward, chief executive of the British Beer & Pub Association (BBPA), believes the trade has to target this argument. He said: "The duty of the trade is to prove that one market of customers isn't switching its attention between karaoke and live football. That is what we have to prove to the OFT."
The All-Party Parliamentary Beer Group has urged licensees to write to their MPs to press them to lobby the OFT, while the BBPA is also lobbying MPs to take the same action.
Martyn Jones MP, who tabled an early day motion in Parliament criticising Sky's alleged monopoly, says he has received a letter from the OFT. It says it has received a number of complaints on the issue and is looking into them to ascertain whether there are grounds of Sky breaching 1998 Competition Act.
The OFT confirmed to The Publican that it had received complaints from MPs and a number of trade associations and it was currently assessing the situation.
Licensees' thoughts
Gareth John, chief executive of the Licensed Victuallers' Association of Wales, said: "I believe that Sky is deliberately pricing pubs out of the market and concentrating on the domestic buyers.
"For us, the latest price rises were the straw that broke the camel's back."
John Price, secretary of Rhondda Licensed Victuallers' Association, agreed. He said: "It's absolutely scandalous."
Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations, said: "Sky has always been an issue that is high on the agenda at every licensed trade association meeting I have been to over the last few years. "We worked out that licensees must sell an extra 119 pints a week to pay for Sky at the moment.
"Many customers come from deprived areas and can't afford Sky themselves. So the pub is only place they get to see live football."
