Is Sky no longer the limit?

By The PMA Team

- Last updated on GMT

Related tags Pub Sky Premier league Guinness premiership Sky sports

Charity: new regime could be win-win
Charity: new regime could be win-win
Sky costs the average pub £8k a year. But the benefits of its new charging regime could make a difference to the sector, says The PMA Team.

It's traditional when Sky unveils a price rise to climb aboard the high horse in this column and have a moan-up.

You know how it goes — bloody monopoly supplier treating the pub industry like a cash cow; in danger of killing the goose that lays the golden eggs; deserves to have customers desert in droves.

But, like most things in life, it's not quite as straightforward as that. Sky has forked out £1.7bn for Premiership rights in its latest contract — up from £1.3bn. It reports that the past three years have seen a rise of three million to 10 million in the number of annual visits to the pub to watch a Sky sport showing. The average pub with a Sky subscription is paying £8,400 per annum.

But unlike a water or electricity supplier, nobody has to sign up to a Sky subscription. The only sane reason to sign a Sky contract is that it boosts business. And the inarguable fact is that an estimated one in three pubs or more within the industry have decided that this is money well spent.

All we ask is that Sky does not take the pub sector for granted and works hard to deliver ever better value. And it deserves praise on this score. It has frozen its prices for the past two years and has worked to make sport-watching in the pub a higher quality, more differentiated experience with the introduction of HD (now free) and 3D television, which has debuted in pubs this year.

This week, it has unveiled a new charging structure that attempts to ensure foodier pubs are paying less for a Sky subscription — and the overall charging regime is better calibrated to a pub's size and rateable value.

There's also a promise that this is only the first stab. Discounts for foodier pubs may well increase (for example, one pub operator with 300 pubs, where 60% of site turnover comes from food, tells me that just six of its pubs qualify for the full 10%) and it is working hard to work out what discount to apply to those whose rateable value is inflated by letting bedrooms.

And Sky is promising greater flexibility on charging less during the summer, not charging pubs that close at weekends in places such as the City of London — and even offering a tenancy-at-will contract so pubs don't have to commit to a full year.

This is not entirely philanthropic. Sky wants to attract lapsed customers back and increase distribution to maintain and boost the substantial income it receives from the pub sector.

But there's also a possible win-win: more pubs will be able to afford to show Sky Sports because it has created a fairer charging regime. Nevertheless, a near-10% increase on average means that many licensees will need to undertake a thorough cost-to-benefit analysis. Those who believe the benefit to their business has been marginal will have to focus on maximising their return — or take the decision to ditch it.

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