In an almost unprecedented move, Discovery Networks UK & Ireland let rip tonight in a scathing press release which revealed that negotiations with Sky have broken down and the two parties have failed to reach a new carriage agreement for their portfolio of channels.
As a result of that, Discovery has stated that unless a new agreement is reached shortly, they will pull all their channels from the Sky platform and NOW TV. There are no changes to BT and Virgin Media customers with whom Discovery has separate long-term agreements in place. What caused the negotiations to break down? The key issues seem to be entirely financial.
Discovery’s position is that as an “independent broadcaster”, they believe Sky is not offering a “fair price” for their channels. “Sky is using what we consider to be its dominant market position to further its own commercial interest over those of viewers and independent broadcasters”, said Susanna Dinnage, Managing Director, Discovery Networks UK and Ireland. Specifically, Discovery says they are paid less now than they were ten years ago, despite the cost of a Sky subscription increasing and the fact that Discovery has increased its share of viewing on the Sky platform by more than 20% in that same time period.
“Somebody has to stand up for consumers, because consumers believe they are paying for choice and diversity – they deserve better. Discovery is prepared to take that stand. Pay television needs to be about more than just films and football. The consumer can’t be expected to fund all of Sky’s investments and get less and less choice in return. We are also concerned that with the recently announced Fox transaction, Sky’s market strength and incentive to disadvantage independent TV content providers will only increase. Dinnage added. “All we ask is that Sky recognise the value we bring to customers and remunerate us fairly so we can continue creating content that inspires and entertains the world,” continued Susanna Dinnage.
Unsurprisingly, Sky has a different take on the situation. A spokesperson for the satcaster told TVWise that Discovery’s price expectations were problematic. “Despite our best efforts to reach a sensible agreement, we, like many other platforms and broadcasters across Europe, have found the price expectations for the Discovery portfolio to be completely unrealistic”, the Sky spokesperson said. “Discovery’s portfolio of channels includes many which are linear-only where viewing is falling.”
“Sky has a strong track record of understanding the value of the content we acquire on behalf of our customers, and as a result we’ve taken the decision not to renew this contract on the terms offered. We have been overpaying Discovery for years and are not going to anymore. We will now move to redeploy the same amount of money into content we know our customers value. Sky will continue to offer a huge range of content, from award winning documentaries to thrilling entertainment, with thousands of hours available to watch whenever and wherever our customers choose.”
Discovery Networks UK & Ireland operates such channel brands as Discovery Channel, TLC, Investigation Discovery, Eurosport and Animal Planet here in the UK. While losing carriage on Sky would undoubtedly be a blow to the company, it is something they seem ready to accept over the terms currently on the table (could that billion pound Olympics deal be a factor?). Discovery’s UK channels have been increasing their investment in commissions in recent years and while not a major player, TLC UK has been relatively active when it comes to U.S. scripted acquisitions. The channel has aired such U.S. dramas as Mistresses, Devious Maids and NBC medical drama Heartbeat.