BSkyB could generate additional revenue of more than £700m if it is allowed to sell Premier League football through Freeview.
In a move described by Sky as a “sop”, Ofcom is likely to allow the broadcaster to go ahead with a project dreamed up in 2007 codenamed “Picnic”. This would involve setting up a subscription channel for Premier League football that viewers can access through a set-top box without subscribing to a cable or satellite provider.
The move will coincide with an expected announcement tomorrow that Ofcom will slash the amount Sky can charge its rivals to screen its premium content by up to a third.
Sky has previously said it could attract an additional 4m viewers if it is allowed to go ahead with Picnic. If it charges £15 a month for the service – the minimum price it is likely to cost BT and Virgin screen Premier League games – it would generate a staggering £720m a year in revenue.
This would more than absorb any dip in revenue caused by a decrease in the wholesale price it could charge its rivals. This is actually likely to increase as more Virgin subscribers and new BT customers take advantage of the lower prices.
One industry source told City A.M. Sky is not worried about short term revenue, but is concerned about rivals chipping away at its subscription base. He said firms such as Virgin and BT could conceivably be in a position to make a joint bid for rights to screen Premier League matches if they are able to ramp up their subscriber bases over the next five years.
A Sky spokesman said: “We would have loved to offer Sky Sports on digital terrestrial TV three years ago. It’s disappointing that viewers have missed out because of Ofcom’s bureaucratic logjam. If it was decided that Picnic could go ahead, we would need to consider whether it still made sense as a business opportunity.”