Market Insight

BSkyB to showcase high end content with Sky Atlantic launch


BSkyB is launching a new channel called Sky Atlantic to showcase HBO programming as well as UK-originated content. The channel, which will be available in HD as well as SD, will launch in early 2011 and will be included in Sky Variety, a basic package costing £19 a month. The launch follows BSkyB's integration of the Virgin TV channels earlier this year. At the same time, BSkyB said it has acquired UK rights to Mad Men, the drama series which airs on AMC in the US, from the upcoming fifth season.

Sky Atlantic marks a slight change of emphasis in BSkyB's programming strategy. The channel will ostensibly be a higher end version of its Sky One general entertainment channel, offering the UK premieres of upcoming HBO series like Boardwalk Empire and Treme and reruns of archive hits like The Sopranos, The Wire and Band of Brothers. Alongside these will be BSkyB's own originated dramas including Martina Cole's The Runaway and Chris Ryan's Strike Back, plus comedies Little Crackers, Stellaand Mount Pleasant.

We estimate that last year, BSkyB spent £160m of its £1.75bn programming budget on entertainment programming - both original and acquired.

Assuming the channel is exclusive to the BSkyB satellite platform, the channel will bolster BSkyB's proposition against its rivals in the UK pay TV market. Cable company Virgin Media, which retails Sky's premium sports and movie channels and is making an aggressive push to sign up HD subscribers, is the main threat.

BSkyB today launched Sky 3D, claimed to be Europe's first in-home 3D channel. Available free to all SkyHD subscribers, the channel will broadcast sports, films and documentaries and other event TV programmes. Subscribers will have to have a 3D TV set to watch the channel.

BSkyB's acquisition of Mad Men comes at a time when public broadcasters the BBC and Channel 4 have said they will cut their spending on imported films and TV programmes. The BBC has broadcast all four series of Mad Men but in last year's Strategy Review, made a specific commitment to reduce its spending on US films and TV series by 20 per cent. While the BBC has entered bidding wars for rights to US programmes in the past, it seems those days are gone and its focus is now on spending up to 90 pence in every pound of licence fee money on UK originated programming.

The shift of Mad Men from FTA (BBC4) to pay (Sky Atlantic) will result in a near 60 per cent drop in household reach as viewers on Virgin Media, Freeview and Talk Talk TV will be unable to view the channel. However, Screen Digest estimates that the Variety pack, on which the Sky Atlantic channel will appear, is subscribed to by close to 90 per cent of Sky TV customers - giving it a reach of nearly 9m homes. For distributor Lionsgate, however, the drop in reach will likely cause little worry, given the the higher revenues it will receive from its deal with Sky.