Sky viewers could soon see Discovery’s portfolio of 12 channels – including Discovery, Animal Planet, Eurosport, Investigation Discovery, DMAX, Home and Health and Discovery Turbo – vanish from their EPGs after the two broadcasters failed to reach agreement on a new carriage deal.
Like all commercial channel owners, Discovery charges TV operators such as Sky for the right to offer their channels to subscribers, the pay-TV firm then recoups the cost through the prices it charges each subscriber.
In a statement issued on Wednesday night, Discovery says talks to agree a new deal with the UK’s largest pay-TV brand “have reached an impasse” and accuses Sky of using “its dominant market position” to avoid paying a fair price for its channels and content.
According to Discovery, the firm is now paid less than it was 10 years ago, despite the fact that Sky households are paying much more than they did in 2007.
Discovery says this situation ignores the growth in its channels’ popularity – over the past decade they have increased their share of viewing on the Sky platform by more than 20% – and makes it harder to justify and recoup its increased investment in original content and new channels.
Channels owners have long privately complained that Sky squeezes them on price and this is said to have worsened since its last premier league bid, with the need to finance the £4.1bn deal seeing Sky seek to cut content and other costs in order to protect margins while avoiding the need to pass the full price of the football deal on to consumers.
Although Discovery hasn’t said how much Sky is offering or what it’s seeking for the channels, its decision to issue a public threat suggests a substantial gap between the two sides.
In its statement, the firm accuses Sky of “limiting consumer choice and hurting independent broadcasters like itself” and says that unless a better offer is forthcoming, the channels “could disappear from Sky and NOW TV households after January 31st.”
Such blackouts are common in the US where channels frequently vanish as part of negotiations between platforms and broadcasters but rare in the UK. In 2007 talks broke down between Virgin Media and Sky, resulting in the firm’s lineup of entertainment channels vanishing from the cable platform for 18 months.
Susanna Dinnage, Managing Director of Discovery Networks UK and Ireland, said: “We are proud to be an independent network of channels that works hard to bring real-world first class channels and programmes to viewers in the UK for nearly 30 years, offering quality and variety to pay television.
“Our portfolio of channels caters to a wide range of personal tastes and interests from adventure, natural history, science and sports to extraordinary people, families, weddings, and true crime.
“From Racing Extinction, Gold Rush, Say Yes to the Dress UK to Cake Boss and Warrior Apes which is launching later this year, we create shows that make people’s worlds bigger.”
“We believe 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.
“The vitality of independent broadcasters like Discovery and plurality in TV is under threat.”
“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.”
“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.
Responding to Discovery’s comments, Sky has accused the channel owner of making “completely unrealistic” demands from it and other pay-TV providers and claimed falling interest in Discovery’s linear-only channels meant it had been “overpaying Discovery for years”.
A spokesperson for the firm said: “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.
“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.
“Sky Sports customers can look forward to another huge year of sport, including the British & Irish Lions tour of New Zealand, unrivalled coverage of the Premier League, every F1 Grand Prix weekend, England’s home Test matches and the biggest competitions in golf, while all Sky TV customers can enjoy a selection of great sporting action at no extra cost, through the recently launched Sky Sports Mix channel.”
Discovery has reassured BT and Virgin Media customers that they will continue to have access to the channels as it has separate long-term agreements in place with those brands.
The full line-up of affected channels is: Discovery Channel, TLC, Eurosport 1, Eurosport 2, Animal Planet, Investigation Discovery, DMAX, Discovery Turbo, Discovery Shed, Discovery Science, Discovery History and Home & Health.
The broadcaster says Sky customers will see onscreen messaging warning of the potential blackout and has launched a dedicated website publicising the dispute.