Sky’s results came out this week – and while subscriber numbers grew the financial results were at the low end of expectations. I feel that their product is disappointing – with too much rugby translating into a general loss of passion for the game, and with an increasing awareness that in tough times paying money to Sky is not really necessary.
Meanwhile only 17% (14,500) of the mySky HDi subscribers have paid $10 a month for access to the HD channels – so clearly the HD channel proposition is not very strong.
Despite this, and somewhat surprisingly during a recession, Sky’s churn rate decreased from 14.9 to 14% for the year.
Or maybe that’s not surprising. My Sky bill is on some sort of manual paper process and as I completely fail at this sort of thing I’ve been receiving a series of calls from Sky credit people. The calls go something like
“Hi it’s so and so from Sky – we’d just like to remind you that your bill is overdue”
“Uhh – thanks”
and that’s it. No – “pay it now or we will disconnect” or “would you like to pay it now using your credit card” or even “when are you going to pay it?“. They just call, tell me I am late and then go away. This went on for some months (I’ve since paid the bills)
It’s like Sky have decided not to churn anybody – especially those with a mySky box.
They do show in their annual report that bad debt went up from $3.3m to $5.2m, but it seems that their definition of bad debt is pretty lax. A note to their annual report states:
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
That means if I’m not asked the question “when can you pay?” then no “objective evidence” of my ability to pay is collected – and Sky doesn’t have to write down my debt. Of course I’m just a single data point, but there is some evidence from the accounts. Does this easy credit translate into the higher receivables (up $6m) and lower cash (down $4m)? If so it means higher profits as less debt is written off.
On the other hand are Sky being very smart here – recognising that times could be tough for their clients, and thinking in the long term? By being soft on credit now Sky customers will more likely keep their system through the tough times and get back on track when times are good. That’s clever thinking.