Exclusive Rights as Subscriber Magnet

“Learning how they operated, Heatley became determined that Sky would stagger the lengths of its contracts to prevent the studios acting in concert when the contracts expired. They might share other information but it appeared to him that the studios did not share information about the end dates of the contracts they were signing. That allowed Sky to do a three-year deal, which was about the norm, with one studio, while another was four years, and another five. When the contracts expired, he hoped the staggered terms would make it difficult for the studios to demand a huge hike in fees in order to renew at a time when Sky would be beholden to them. The strategy worked. By the time the contracts were renewed in the nineties, Sky had credibility and more bargaining power and it could deal with each studio individually on its merits. However, getting past the danger zone proved far more protracted and precarious than Heatley and Jarvis could, at the time, predict.”

“Compelling sporting content, Heatley reckoned, would bring its own publicity. ‘Watch how much free publicity we get if we have exclusive All Blacks touring South Africa—and watch how many new subs we get,’ he urged. Sky should be budgeting in the expectation of buying exclusive rights to live coverage of the next rugby and cricket world cup competitions, along with rugby league and domestic rugby coverage. These events were critical. ‘We could have the best marketing in the world but if the product is not compelling we will not achieve the market penetrations that we can and thereby generate the profits that are there for Sky.’”