Current goal: increase subs, launch new channels, new content

LONDON — Satcaster BSkyB has poached Channel 5′s CEO Dawn Airey as managing director of Sky Networks, where she will have another go at boosting commissioned content. But can she succeed where others have failed?

Rupert Murdoch’s daughter Elisabeth had little luck when she held the same position at daddy’s firm two years ago, paying handsomely to attract established onscreen talent. Sky even launched a second entertainment channel that shuttered after failing to attract auds.

So what has changed two years later? Neil Blackley, European media analyst at Merrill Lynch, says Sky has a “digital terrestrial strategy” thanks to the BBC’s digital free-to-air platform Freeview, due to launch this fall.

BSkyB, which dominates British pay TV broadcasting, has secured carriage on the platform for a number of its channels, including Sky News, Sky One, Sky Travel and three new branded music channels.

“The big thrust is that the Sky Travel channel is going to have an entertainment element. Gradually, as viewership builds up in digital terrestrial, it will morph into a general entertainment channel,” Blackley says. The new channel is expected to aid films, sports and entertainment programming.

This is a challenging role, but Sky TV CEO Tony Ball is confident that Airey has what it takes.

She is credited with the success of 5-year-old C5, recently rebranded Five, which has seen its audience share increase from 5.7% to 6.5% in the past year.

Struggling commercial giant ITV was so impressed with her performance that it tried to woo her as CEO, while Bertelsmann’s RTL, a 65% shareholder in C5, offered to increase its programming budget by £9 million ($14 million) next year to keep her.

The goal now is to increase Sky subscribers from 6.1 million to 7 million over the next year; to launch new channels; and to reinvest savings in new content commissioned for Sky.

Some 53% of Sky’s operating costs are spent on programming. BSkyB aims to cut annual spending on movies by about $94 million to $562 million. It also intends to cap spending on sports by withdrawing from events such as Six Nations Rugby.

In the year ended June 30, Sky spent $1.035 billion on sports, and last week the paybox ponied up $67 million for shared rights to Champions League soccer.

With a shift in strategy to develop channels that appeal to a terrestrial audience, there is growing speculation that Murdoch’s News Corp., a 36.3% shareholder in BSkyB, could snap up United Business Media’s 35% stake in C5 if British media ownership rules are loosened next year.

United has tried to block increases in programming budgets in the past so RTL would welcome the chance to turn the shareholder structure into a “sympathetic ownership,” according to Blackley.

But RTL, Europe’s largest TV group has repeatedly stated that it is determined to remain a majority shareholder in C5.

Whether Murdoch would be interested in a minority stake is questionable. RTL’s decision to allow a quick and smooth exit for Airey is certainly fueling the debate, and such a holding would give Murdoch a valuable foothold in the U.K. analog terrestrial TV market, which has greater reach than its pay service.

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