Quote:
Originally Posted by denphone
It might not have passed it on that much on its own platform but that certainly won't be the case when it comes to Virgins platform and its sports subscribers.
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It's not gone up by 71% on Virgin Media, I think it tends to go up by about 5%-10% a year. There's a few reasons why it can't pass the costs onto Virgin Media customers as you suggest it does:
1. Regulatory - the prices for the main channels are regulated by an Ofcom formula.
2. Sky's revenue from VM = number of subscribers x price. If it pushes up the price too much then the number of subscribers drops reducing its revenue.
3. If Sky was able to charge considerably more for Sky Sports whilst keeping the same number of subscribers, it would have done so already. Its owners, mainly pension funds (and Fox) would want it to maximise its profits so they can maximise theirs.
4. Pricing. Sky's pricing is pretty sophisticated, it undertakes extensive research so that it knows the most it can charge without losing significant numbers of subscribers. It's not, for example, a decorating business that looks at its costs then adds on 10%. Sky Sports' costs are pretty much fixed whether it broadcasts to one million or ten million people. It therefore needs to find the right point that gets the most revenue from a combination of price and subscriber numbers.