BSkyB job losses expected as Picnic is axed

Whilst the news of BSkyB abandoning their Picnic terrestrial pay-TV project isn't that surprising in itself, the official reason given for its discontinuing - namely Ofcom taking too long to reach a verdict on the proposal - has (as always) to be treated with a pinch of salt.

BSkyB knew from the start that the chances of Picnic being given the go-ahead were pretty slim when it also has the UK satellite pay-TV monopoly (if Ofcom had said yes then Picnic may have still failed the monopoly test), and was presumably prepared for a lengthy consultation period despite superficial attempts to rush the proposal though.

And knowing BSkyB's previous track record of going well out of its way to scupper rivals, including its stakeholding in ITV that was designed to stop a Virgin Media takeover (its anti-VM press campaign was a sight to behold as well), it now seems fairly clear that if the project still had a useful purpose then BSkyB wouldn't have abandoned it at this stage.

From the outset it seemed obvious that the Picnic proposal was primarily designed to unsettle Setanta, since Picnic on its own would have had limited appeal unless it was very cheap; the proposition would have had about six terrestrial pay-TV channels to offer at most which isn't much at all when compared to Sky's satellite TV packages.

But now that Setanta appears to be struggling (and may fail unless it boosts its subscriber numbers), the requirement for Picnic as a spoiler has now diminished; BT Vision hasn't exactly materialised as a serious short term threat to Sky either, therefore it now seems obvious that Picnic has rapidly dropped down the list of priorities for BSkyB.

Also of note is the possibility of increased costs in relation to Sky retaining a full set of Premiership football rights (especially with active interest from Disney's ESPN), and when combined with the imminent possibility of being forced to sell its ITV shareholding in a depressed market, the additional expense of Picnic may risk turning into a liability.

It will also be interesting to see what BSkyB will do next in relation to its three existing Freeview channels, which had effectively become placeholders in anticipation of Picnic being given the go-ahead, but Sky may not risk selling their slots to a rival broadcaster therefore some form of continued presence on Freeview for Sky is very likely.