Shine acquisition could propel original programming

The U.K. paybox BSkyB is a world-class player, hugely profitable and, without question, Blighty’s dominant commercial broadcaster.

The company is feted for its matchless coverage of live sports, the pioneering Sky News, and such technological innovations as the Sky Plus digital video recorder. It is also a leader in HD in Blighty, providing more than 50 high-def channels for its 10 million-plus subscribers. Last year came another innovation: what Sky claimed was Europe’s first 3D channel.

But on the thorny issue of investing in original, U.K. shows, as opposed to buying them ready-made from the U.S., the satcaster’s record is less distinguished. In fact, for a long time some commentators have argued that the News Corp.-controlled BSkyB is not so much an entertainment firm as a technology company.

However, that perception is beginning to change as the satcaster, in common with other European payboxes, gives more thought to its role as a commissioner and producer of content across all the main entertainment genres — drama, factual and comedy.

“The next stage of Sky’s strategic development is tied up with the content business,” says a seasoned U.K. media watcher.

“When you get it right, English-language programming is a world-beater, which is one reason why News Corp. has bought Shine.”

It remains to be seen what, if any, synergies eventually unfold between Shine, sold to News Corp. by Elisabeth Murdoch in February for £415 million ($671 million) and BSkyB.

In this context, it’s worth remembering that Shine’s distribution business is a key part of the company’s activities. Few industryites will be surprised if at some stage, the firm lands some distribution deals on shows commissioned by Sky.

“We are totally driven by ideas,” says Sophie Turner Laing, BSkyB’s managing director of entertainment and news. “If we generate an idea ourselves, we are obviously going to talk to Shine, because they are really good at what they do.”

At present, the paybox’s number of original commissions remains small, not enough to keep a big producer like Shine in business.

“Sky’s non-sports schedules are acquisition-led,” says Theresa Wise, a British media consultant and ex-Disney executive.

“Sky has commissioned its own shows for a long time — not that many, but they’re now making a few more than they used to.”

The company declines to put a figure on how much it spends on U.K. shows or how many hours of homemade fare, excluding sports and news, it commissions.

Or, for that matter, what percentage these productions form of the overall schedule of flagship entertainment channel, Sky One, whose most popular shows tend to be such U.S. imports as “Modern Family” and “The Simpsons.”

According to analysts in 2009 (more up-to-date figures are not yet available), BSkyB spent less than $161 million on homegrown fare.

Sources at the firm suggest this figure considerably underestimates the current spend. The firm announced a “160% increase” to its development budget, adding that this involved a “multimillion-pound investment.”

“It’s partly a point of pride, especially with the kind of drama they’ve moved into, and a signal about prestige and brand, as well as market differentiation,” Wise says.

Undoubtedly, the paybox’s recent commissioned drama, such as the acclaimed thriller “Mad Dogs,” (a ratings hit for Sky One with almost 1 million viewers tuning in), suggest that BSkyB’s homegrown dramas are becoming increasingly ambitious — and successful.

“British programming is very important to us,” Turner Laing says. “Without a doubt, our customers love it. They may love ‘Lost’ or ’24,’ but it’s original programming, and British content, that really resonates.”

In fact, while the total number of BSkyB’s original commissions remains small, there is an increasing feeling that, thanks to Turner Laing and her team, in this department the paybox is creatively punching above its weight.

Not so long ago, Sky Arts re-introduced live theater to British TV with a run of well-reviewed plays scripted by writers new to the stage. More recently, the paybox ordered its first two comedies.

One entitled “Stella,” about a fortysomething mother, is penned by the highly sought-after talent that is Ruth Jones, star and co-creator of the hit BBC sitcom “Gavin and Stacey.” She also plays the lead.

Says Turner Laing: “It is very important for pay TV companies to have quite a large supply of marquee shows, so they can differentiate themselves from free-to-air broadcasters.

“Our portfolios across Sky 1, Sky Living and Sky Arts are a mix of acquisitions and commissions. … We’re now heading into a position where there will be a much more balanced mix of the two.”

Some think that the endgame for Sky’s content ambitions is to position itself as the U.K. equivalent of HBO, backing the kind of edgy, high-end fare that commercial rivals might lack the nerve to tackle.

That may look a long way off now, but with such a determined and still ambitious operator as BSkyB, poised to soon become owned totally by News Corp. (on tap to increase its stake from 39%), nothing can be ruled out.


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