Advertisers demand refund from Sky

[Analoguesat]

Major advertisers are threatening to ask BSkyB for refunds on deals agreed with the broadcaster, a report claims.
Big names such as Honda and Cadbury's will ask for a reduction in their fees from July, the Sunday Telegraph said.

With channels being removed from Virgin Media as a result of a row, advertising audiences are lower than expected - prompting the refund demand.

Sky said it had warned the move would hit revenues, leading to a hit of £15m to £20m for the financial year to June.

"We have been very transparent about the implications for advertising revenues," a spokesman for the satellite broadcaster said.

However, he admitted that there were "no sign" of any potential talks between Sky and Virgin and there had been "no change in the situation".

Channels row

BSkyB basic channels, including Sky One and Sky News, were cut from Virgin last month following a row over the fees BSkyB wanted to charge for the service.

The dispute has led to the threat of legal action by Virgin, while the National Consumer Council has also said it is considering asking for a review of the digital television market in the wake of the row.

According to the Sunday Telegraph report, Sky has lost access 3.3 million customers which viewed its basic channels on Virgin's cable TV service - 10% of its average audience share.

Advertising agency Starcom - which represents Cadbury's Honda and Pizza Hut - told the newspaper it would push Sky for discounts.

Opera, which represents Sainsbury's and Vodafone, said it was confident advertisers would be "compensated for any loss".

Freeview future

Meanwhile, Sky's plans to withdraw its channels from free-to-watch digital service Freeview could lead to further trouble for the broadcaster.

In February, the firm said it planned to withdraw Sky News, Sky Sports News and Sky 3 from Freeview and replace them with four pay-per-view channels.

According to the Independent, the BBC, ITV and Channel 4 are planning to call on media regulator Ofcom to strip Sky of its share in the Freeview venture over the decision.

Sky is expected submit an application to Ofcom for it to approve its plans to change its Freeview licence within the next few weeks.

However, if Ofcom believes the alterations will "unacceptably diminish" the channels offered on Freeview it could refuse permission for Sky's plans.

Ofcom, along with the Office of Fair Trading, is also currently looking into Sky's controversial purchase of a 17.9% stake in ITV.

BBC News.