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3 Choice and Value from Pay Tv [Client name] Confidential [Title of report] The outcomes for consumers in relation to pay TV in Europe A report for British Sky Broadcasting Limited 29 February 2008 [date] 1 British Sky Broadcasting Limited Non-confidential version The outcomes for consumers in relation to pay TV in Europe Important Notice This report has been prepared by PricewaterhouseCoopers LLP (“PwC”) for British Sky Broadcasting Limited in connection with a comparison of pay-TV services in Europe under the terms of British Sky Broadcasting Limited’s engagement letter with PwC dated 19 September 2007 (the “Engagement”) and its contents are strictly confidential. PwC neither accept any responsibility nor owe any duty of care to any person (except to British Sky Broadcasting Limited and the following members of the British Sky Broadcasting Limited Group: Sky Subscribers Services Limited, Easynet Group Limited, Sky Television Limited, Sky Broadband SA, British Sky Broadcasting Group Plc, BSkyB Telecommunications Limited, Sky In-Home Service Limited and Sky Interactive Limited (together the “Group Addressees”) under the relevant terms of the Engagement, including the provisions limiting PwC's liability) for the preparation of the report. Accordingly, regardless of the form of action, whether in contract, tort or otherwise, and to the extent permitted by applicable law, PwC neither accepts any liability or responsibility of any kind nor owes any duty of care for the consequences of any person (other than British Sky Broadcasting Limited and the Group Addressees on the above basis) acting or refraining to act in reliance on the report or any part thereof or for any decisions made or not made which are based on such report or any part thereof. This report contains information obtained or derived from a variety of sources as indicated within the report. PwC has not sought to establish the reliability of those sources or verified the information so provided. Accordingly no representation or warranty of any kind (whether express or implied) is given by PwC to any person (except to British Sky Broadcasting Limited under the relevant terms of the Engagement) as to the accuracy or completeness of the report. Moreover the report is not intended to form the basis of any investment decisions and does not absolve any third party from conducting its own due diligence in order to verify its contents. Copyright Notice © 2008 PricewaterhouseCoopers LLP. All rights reserved. “PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP a limited liability partnership incorporated in England or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate legal entity. 29 February 2008 i British Sky Broadcasting Limited Non-confidential version The outcomes for consumers in relation to pay TV in Europe Contents 1 INTRODUCTION .......................................................................................................................................................................................................................... 1 1.1 Background and scope of the study ............................................................................................................................................................................ 1 1.2 Our approach to the study........................................................................................................................................................................................... 3 1.3 Structure of this report ................................................................................................................................................................................................. 3 2 ISSUES AND BACKGROUND......................................................................................................................................................................................................... 5 2.1 Key issues ................................................................................................................................................................................................................... 5 2.2 Overview of the heterogeneous nature of pay TV sectors across countries............................................................................................................... 8 2.3 Geographic coverage and retailer choice.................................................................................................................................................................. 12 2.4 Historic cable penetration .......................................................................................................................................................................................... 13 2.5 TV platform penetration at the end of 2006............................................................................................................................................................... 15 2.6 Estimate of “genuine” pay TV penetration at the end of 2006................................................................................................................................... 16 3 CHOICE AND VALUE FROM PAY TV............................................................................................................................................................................................ 19 3.1 Introduction ................................................................................................................................................................................................................ 19 3.2 Structure of pay TV offerings..................................................................................................................................................................................... 19 3.3 Choice and prices of packages – approach and methods ........................................................................................................................................ 22 3.4 Choice and prices of packages - results ................................................................................................................................................................... 28 3.5 Prices of installation and hardware............................................................................................................................................................................ 37 4 INNOVATIVE SERVICES ............................................................................................................................................................................................................. 40 4.1 Introduction ................................................................................................................................................................................................................ 40 4.2 The introduction and development of digital pay TV ................................................................................................................................................. 41 4.3 PVRs.......................................................................................................................................................................................................................... 43 4.4 HDTV ......................................................................................................................................................................................................................... 45 4.5 Indicator of innovation launch dates.......................................................................................................................................................................... 48 4.6 Innovative services penetration of TV households.................................................................................................................................................... 49 4.7 PVR penetration of TV households ........................................................................................................................................................................... 49 4.8 HDTV penetration of TV households......................................................................................................................................................................... 51 4.9 Innovation penetration assessment........................................................................................................................................................................... 52 29 February 2008 ii British Sky Broadcasting Limited Non-confidential version The outcomes for consumers in relation to pay TV in Europe 4.10 Overall innovation assessment.................................................................................................................................................................................. 54 5 CONCLUDING REMARKS ........................................................................................................................................................................................................... 56 5.1 Introduction ................................................................................................................................................................................................................ 56 5.2 Comparability of pay TV sectors across countries ...................................................................................................................................................
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