Sky in pubs: Enough is enough?
Licensees are faced with tough business decisions every week, if not every day, of their lives.
And in the current climate these decisions just get harder and harder. Working out what will entice customers and what works for your venue is all part of the challenge of running a pub.
One of these conundrums is, of course, whether to screen live sport. For some, it's a relatively easy choice - perhaps it does not suit the area, or the offer is food-led and people don't want TV screens around. But for many, weighing up whether sport makes sense or not is tough.
And we all know, of course, when we talk about live sport in pubs, that means one word: Sky. But with the new football season having just kicked off and the satellite broadcaster last month unveiling a new pricing system, this decision has never been more critical.
Vitriol from the trade
For a number of licensees it seems Sky has now jumped the shark.
Despite assurances the new system is "fairer", the vast majority of licensees we have heard from have been hit with what the Association of Licensed Multiple Retailers (ALMR) believes to be a 21.5 per cent average hike in their fees.
Sky says the increase is between 9-11 per cent. The period of 3DTV being exclusive to pubs is now also over.
Sky price increases have always attracted obvious vitriol in the trade. But the latest hike has left the trade fuming.
Even Fuller's managing director, Simon Emeny, usually a reserved figure, has taken the step of writing to the trade press voicing his displeasure.
Emeny attacked Sky for a "disproportionate and unjustifiable increase" in fees, pointing out the vast majority of its estate will see a price rise.
He said 90 per cent of its tenanted estate were seeing "big increases" in their Sky bill - some of up to 30 per cent. In its 58-strong managed estate, he said all but one pub was facing a hike of between 25 and 60 per cent.
Emeny wrote: "In this age of economic austerity I find it incomprehensible that Sky can enforce what in our case at Fuller's amounts to a 25 per cent price increase for their services and then claim that their new tariff is still being developed."
He added: "Which other supplier could come to us with a) such a disproportionate and unjustifiable increase b) have the temerity to falsely claim that many pubs will see a reduction and c) say that their tariff is initially incorrect, and needs (unquantified) changes at an unspecified time?"
Emeny concluded the letter saying Sky will have a "reduced presence" in Fuller's estate.
An increase for the majority
Meanwhile, a survey of its members conducted by the ALMR found 94 per cent of pubs faced an increase in the cost of their Sky service.
The trade body found the average rise was 21.5 per cent, with some venues facing hikes in excess of 30 per cent. Only four per cent of pubs said they had seen a fall in their subscription, on average by eight per cent.
The British Beer & Pub Association, which has also been quiet on this issue for some time, is also upset with Sky.
"There's a disparity between the cost impact that the trade calculates and the cost impact that Sky calculates," said BBPA communications director Mark Hastings. "Discussions are continuing about how to address that particular issue."
And Punch Taverns said that in its managed estate the increase is likely to be 20 per cent-plus.
But Iain Holden, Sky Business managing director, previously wrote in The Publican that "many thousands of pubs will actually see a price decrease".
He argues the new system now "better reflects the value of Sky to individual premises" and has promised the new system will continue to evolve. As part of the new pricing structure, Sky is looking at how each pub is driven by things such as sport, outdoor areas, food and accommodation.
But a growing number of licensees commenting on ThePublican.com have threatened to dump Sky. For some this can be a risky step into the unknown as there's no doubting that a top match does significantly increase footfall. But what can pubs do to make up for ditching Sky? In a new series we'll be taking a look at how pubs can "think outside the box", if they decide live sport is not for them.
The series will shine a light on the options that are available to licensees who are seeing this as a positive opportunity to diversify their business.
It's easy to be all doom and gloom about Sky's stance, but as Holden himself says: "Every business has a free choice about whether to subscribe, based on an economic assessment of the worth of live sports."
Think Outside the Box
Mike Smith, licensee of the Three Compasses in Hornsey, North London, is planning to remove Sky from his pub at the end of this month.
He has already been trialling a quiz night on a Monday night to see how this compares with screening football.
He admits that showing Sky Sports pulls people in. But he adds: "It's often transient custom that does not fit with our aim of creating an interactive community pub, and it's really very marginal to say that we are financially better off having paid the Sky fees."
At the Three Compasses, they have found that "Sky-related customers" spend £4.50 per head, about a pint and a half, per event (gross profit £2.25).
"And customers would bugger off at the final whistle," says Mike.
"This compares unfavourably with quiz night customers, who spend on average £13.50 per head (gross profit £8), because they stay longer and often buy food too. Plus, they interact positively with other customers."
He says the Monday quiz night attracts 20 teams - 80-100 people - and has made Monday the pub's second busiest food day of the week, after Sunday.
Mike thinks Sky is sailing "close to the wind" if it believes the pub industry's demand for its product will keep it paying any price.
"There are clearly alternatives to watching Blackpool v Wigan," he says.
The Three Compasses - Sky fees
2004/5 £330 p/m
July 2010 £545 p/m
August 2010 £743 p/m (without Sky Sports 2)
Figures do not include VAT
• Have you withdrawn Sky in the last year or two, or are planning to? How are you making up for it? Email jamesw@thepublican.com
