BSkyB CEO Touts Original Content Push, Says Won't Need to Acquire Production Firm

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Jeremy Darroch also discusses a new Warner Bros. film output deal and how the phone hacking scandal at big shareholder News Corp. has affected the U.K. pay TV giant.

LONDON - U.K. pay TV giant BSkyB expects its push into more original content to pay off over time, but doesn't need to acquire a content production firm, CEO Jeremy Darroch told an investor conference on Wednesday.

Appearing at the Goldman Sachs 21st Annual Communacopia Conference in New York, he said his company's investment into originals would help it serve audience needs and build a programming library that BSkyB can increasingly monetize over the coming years.

In his appearance, which was webcast, he was asked if BSkyB feels the acquisition of an independent production company would further help its strategy. Darroch argued though that it is about attracting the best ideas and being "careful about creating an environment where you are too narrow." With its current setup, BSkyB can "attract the very best talent," including David Attenborough and others who enjoy seeing the company invest and provide creative freedom, he explained.

Darroch also faced a question about whether the phone hacking investigations against News Corp.'s News International unit in the U.K. have affected BSkyB given that Rupert Murdoch's entertainment conglomerate owns a 39 percent stake in it. "We are very separate from all the activities" at News International, he said. "The only thing that affects us are the broader reviews," such as the Leveson Inquiry into media standards and ethics where the company was asked for comment due to its Sky News business. But overall, Darroch said "it hasn't really affected us at all. I certainly don't expect any [problems]."

U.K. media regulator Ofcom is also looking at the company's broadcast license because of News Corp.'s phone hacking scandal and its stake in the company. But Darroch highlighted BSkyB's "strong track record" in that regard in addition to his earlier comments that once again highlighted that he runs the firm as a separate business.

Discussing a new multi-year film output deal with Warner Bros., which was announced late Tuesday, Darroch said it was a good example for how BSkyB can bring the right financial offer and additional capabilities to a deal to benefit a studio. Five years into a relationship with Warner, the new agreements allowed BSkyB to extend "some windows" to give it access to movies for "a longer period at the back-end," he said.

Given that British telecom giant BT has in recent months acquired some soccer games in the English Premier League, which mostly airs on BSkyB, by outbidding ESPN and the rights to English rugby union league games, Darroch was also asked about his take on the sports rights competition. 

While the soccer costs rose more than expected in the company's renewal, "we'll deal with that," the CEO said. "In total, I feel really good about our position in sports."

He highlighted that BSkyB had renewed three cricket TV deals earlier in the day. "Cricket is really important to our customers," he said. "I think we're in good shape."

Asked about recently-launched online-only programming service Now TV, Darroch reiterated that a current movie offer would be enhanced with sports and entertainment offers in the near future. For the sports content portion, scheduled to be added before year's end, BSkyB will play with different packaging options, the CEO said. Among them will be a subscription option and more pay-as-you-go options, including a likely offer to get Sky sports content for a weekend, he said. "Clearly, we think a lot about cannibalization," Darroch said. "We will initially be pretty cautious."

Discussing the business and financial performance of BSkyB, Darroch said the firm has had "another really good year of operations" that has also allowed it to lay the groundwork for the future. Its on demand, Sky Go, Now TV and original content business "will come to fruition over the coming years," he predicted.
Darroch, a former Procter & Gamble executive with experience in consumer products where companies tend to sell multiple products, said offering such multiple products and services have helped BSkyB get through a time of a U.K. economy that faces headwinds. "That's why we have been outperforming," he said.


Twitter: @georgszalai