British Sky Broadcasting Group, Plc
17 Pages Posted: 21 Oct 2008
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British Sky Broadcasting Group, Plc
Abstract
British Sky Broadcasting Group plc (BSkyB) packaged television content into channels and distributed it via satellite to subscribers and to other distribution platforms. Sports programming and, in particular, live coverage of Premier League Football was one of BSkyB's main attractions for its customers and lay at the core of BSkyB's positioning. In 1996, BSkyB acquired a four-year license to the exclusive broadcasting rights of all Premier League football matches for (pounds) GBP670 million. The year was 1999 and, as the expiration of the Premier League license drew nearer, new strategies for the upcoming licensing round had to be formulated. This case may be used as part of a course on strategic analysis (game theory) or as a stand-alone class in a strategy course. The case is centered on the strategic effect of asymmetric equity positions (“toeholds”) on bargaining power. In particular, the case offers opportunities to discuss: • The effect of vertical integration on bargaining power • The strategic analysis of toeholds • Iterated competitive analysis • The notion of dominance solvability.
Excerpt
UVA-QA-0667
British Sky Broadcasting Group plc
British Sky Broadcasting Group plc (BSkyB) packaged television content into channels and distributed it retail via satellite within the United Kingdom and the Republic of Ireland and wholesale to other distribution platforms. Born out of the merger of two satellite TV companies in 1990, BSkyB was listed on the London and New York stock exchanges with a market capitalization of (pounds) GBP8.7 billion (as of February 1999). Exhibits 1 and 2 detail the company's financial data. Its largest shareholder, with a 40% stake, was News International, a wholly owned subsidiary of News Corporation, 30% of which was, in turn, owned by the family of Rupert Murdoch.
Sports programming and, in particular, live coverage of Premier League Football was one of the main attractions of BSkyB to its customers (Exhibit 3). Live coverage of sporting events had earned BSkyB the recognition of 15 industry awards, from such institutions as the Royal Television Society. Premier League Football was both the most regularly watched and the most popular sport among BSkyB subscribers (Exhibit 4). In 1996, BSkyB had acquired a four-year license to the exclusive broadcasting rights of all Premier League football matches for GBP670 million. The year was 1999 and, as the expiration of the Premier League license drew nearer, new strategies for the upcoming licensing round had to be formulated.
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Keywords: merger toehold vertical integration
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