Saturday, 27 June 2009

Sky gets limited?

Media students always seem to baulk at the idea of studying numbers, yet understanding the business models of production, distribution, and exhibition are crucial to anyone contemplating entering any of the creative industries.

News breaks that OFCOM, the UK media regulator, is planning to cut the prices that Sky, Rupert Murdoch's satellite outfit, can charge to third parties, like Richard Branson's cable-based Virgin Media, for hosting Sky channels like Sky Sports 1. 

This story is a classic case of how the media operates in what is often tantamount to a strange act of parasitic content sharing and money shifting.

The linked BBC article covers the finer details well, so I won't attempt to repeat those here, but do have a look at them.

The headline issues are as follows: 

  • Sky paid a fortune to the Football Assocation et al for the rights to show football.
  • In addition, there are production costs for filming, editing, promoting and commentating on matches. This is a cost Sky picks up. 
  • It recuperates some of this cost via in-match advertising plus the monthly subscription fees it charges to viewers. So, there's a clear relationship between production and exhibition, in terms of Sky itself, which not only produces the content but owns the satellites, dishes and decoder boxes that allow people to watch its content.
  • However, in order to maximise viewers, avoid claims of monopolizing the market, and recoup more of it initial outlay, Sky effectively distributes itself, reselling and distributing its channels with other media outlets. Virgin Media is a good case in point.
  • This creates an interesting symbiotic relationship between Sky and those who appear to be its competitors. Although it may seem to fly in the face of business orthodoxy, Sky is not giving away its content, nor is it diluting its brand. It is expanding its distribution channels by re-selling itself, at a profit, to companies serving non-Satellite based markets.
  • The risk in terms of having its wholesale prices cut, as OFCOM wants, is that the price for various channel packages will fall to a point where Sky is only just covering its costs. For a business, especially in a recession, this is bad.
  • However, if seen as an opportunity, given the right marketing mix Sky could see subscriber numbers rise, and in turn be able to charge more for advertising; except, we're in a recession and advertisers don't have any money to spend in the first place.
At the moment Sky's response is to say it will mount a legal challenge. However, it seems possible that OFCOM will have its way. Maybe Sky knows this, but hopes the cost of dragging out a case might be less expensive than seeing re-sale prices plummet at the bottom of the recessionary economic cycle. You see, the world of business media is complex, inter-connected, and central to what we get to watch.

Still think the numbers game is tedious? Think again. It drives the majority of decisions affecting all aspects of what we see, read, hear, and watch. 

To put it another way: I may not be an engineer or any good at DIY, but I can still appreciate the genius of engineering when I peek under the bonnet of my car and note the many complex sequences that occur, allowing me to get from A to B in comfort and ease.

Where reality gets in the way

So, let me begin with an apology.

This last month or so has been exam time for me, when students get ready to flee the nest by sitting their final year secondary school exams and move on to university, or in the case of my year 12s, get the first part of their A levels sorted, ready to move into their final year.

What this means is that I get overloaded with coursework portfolios and the attendant administration that accompanies them. Allowing for revisions I estimate I read and marked over 100,000 words. I've also had the joys of assessing Year 12 work that's now submitte in the form of blogs and DVDs with extras. Managing all that data has been unexpectedly complicated, in terms of tracking and collating information. We'd thought paperless would be swifter, but making the adjustment has been trickier than we'd anticipated; which goes to show that deploying new technology in learning environments never progresses as you imagined it might.

In amongst all of that I also took 30 eleven year olds to Italy for a week on a Classics tour. Using a Samsung NC10 laptop and a nifty mobile broadband USB stick from 3 Mobile I kept a daily blog. I managed to blog from within the Colosseum and the top of Mt Vesuvius. Interestingly, this year the parents wrote back to me, leaving messages for their kids and questions about where we were. 

In that time we've had Lord Carter's Digital Britain report, looking at ways to expand digital take up in the UK, and suggesting that possibly the BBC should be top-sliced and share its licence fee with commercial competitors, in order to maintain regional news, for example. Not surprisingly, the BBC responded negatively to the suggestion, as did the Liberal Democrats, who struck a chord for all who believe in an independent public service broadcaster. At the same time the Corporation has disclosed the size of its senior staff's salaries and their expense claims. All I can say is that there seems to be a lot of people claiming over £200,000 a year, which is surprising for what is effectively a public sector employer. 

Elsewhere in the world Iran has tried free speech and Twitter was there to keep the lines of communication open. The usual rules apply - be wary of the unfiltered and unverifiable information that Twitter can spew out. Nonetheless, it still makes for fascinating reading. 

Meanwhile, the Head of the BPI, the British music industry body has said Napster should have been engaged with, rather than taken to court. It's a good example of new tech and alternative practices being feared because they were unknown. Lots of similar attitudes exist within education, with staff fearing what hasn't been explained properly.

And finally, the tragic and premature death of Michael Jackson at 50 saw the internet grind to a halt, and BBC soap East Enders show speed and agility when it rapidly added a scene that included reference to this major cultural event, ready for broadcast on Friday night.

All in all it's been a busy six weeks and I've been busy too working on plans for our school's VLE, testing new kit (digital SLR upgrade, audio recording kit, HD camcorders that record to 16gig SD cards) and a whole lot more.

Now that the students have finished I hope to get back to writing and sharing.

All the best,