BSkyB veryard projects > business organization > case studies > bskyb

Analysing BSkyB - Suggested Angles  veryard projects > business organization > case studies  > bskyb > angles

	Look at the company’s own website, especially the section aimed at investors. What is the company saying about itself and its future prospects?
	Look at the investment advice offered by city analysts and financial journalists. Are BSkyB shares regarded as good value? Look at the P/E ratio for BSkyB and compare it with other large media companies. Try to understand the reasons behind the current valuations.
	What do Sky’s customers think they are paying for and what do they actually get for their money? Do the viewing figures provide evidence that Sky’s proposition to viewers is sufficiently attractive to fuel further growth?
	Look at the relationship between Sky and other companies in the Murdoch empire – News International and Fox. Look at the relationship between Sky and other UK broadcasters, including the BBC. Look at the relationship between Sky and sports organizations, including football. Can you identify anything that might affect these relationships in the future?
	How could Sky be affected by technological changes? Can you identify anything specific that might significantly change the market for satellite television? In what kind of timescale?
	How could Sky be affected by regulatory change? Can you identify specific proposals that might affect Sky’s competitive position? How likely are these proposals to get implemented?
	What stakeholders are potentially affected by Sky’s commercial success or failure? What power do these stakeholders have, to do things that might affect Sky’s viability?

Analysing BSkyB - Evaluation veryard projects > business organization > case studies  > bskyb > evaluation

• State clearly what analysis has been done to support the essay and why.
• Identify the perspectives taken by the main sources used, and relate them to the perspectives used in the essay.
• State clearly what hypotheses about Sky have been put forward and what conclusions can be reached about them.
• Show that you have arrived at your own critical position rather than relied too heavily on the judgement of others.

Balance of Fact, Analysis and Opinion

At the other extreme, some essays were deluged in facts, but with no analysis to make sense of the facts. We got biographical details of the Murdoch family, and customer anecdotes of failed set-top boxes – possibly very interesting if you could find a way of linking it to the main topic of the essay (corporate viability), but otherwise a waste of space.

Some essays seemed to be composed entirely from extended quotes from journalistic sources, with no commentary or other material. Some essays relied too heavily on the Sky website, without balancing it against independent sources.

Unwarranted certainty

Some students fell into the trap of asserting something definite in one paragraph, and then asserting the exact opposite in the next paragraph. Better to adopt more cautious turns of phrase – "A tends to increase the chances of B."

Essays that used different sources of information at different times produced different facts. For example: different P/E ratios, different estimates for Tony Ball’s payoff.

Any sources – even respectable ones like the Financial Times – can get it wrong sometimes. Ideally, each fact or opinion should be referenced to its source. (Most students simply put a list of sources at the end.)

BSkyB - Viability - Perceived and Actual veryard projects > business organization > case studies  > bskyb > viability

• what BSkyB and its officers (and ex-officers) assert
• what City journalists and experts believe
• what the market believes (as evidenced by the share price)
• what is really going on

Viability (html) Viability Course Notes (pdf)

Confusing cause and effect

High expectations of Sky’s future profits

High demand for Sky shares

High share price

High P/E ratio

A high P/E ratio is a sign or indicator of high expectations. It is not generally a cause of high expectations in the company.

Generally, as share prices rise, fewer investors are willing to buy, and more investors are willing to sell. Thus share price increases are normally self-limiting. (There are some apparent exceptions to this, largely based on the behaviour of speculators, especially those who practise so-called momentum investing, which involves betting on the continuation of recent price movements. However, this is merely based on a prediction of short-term share price movements and does not represent a judgement about the underlying viability of the company.)
 

Price/Earnings Ratio

Choice of measurement

BSkyB - Framing the Analysis veryard projects > business organization > case studies  > bskyb > frame

When analysing the viability and competitive position of BSkyB, it may be useful to separate these two aspects. The competitors for content may be collaborators on delivery, and vice versa. Technological progress may affect delivery but has no direct impact on content, while the exclusive deals with football and other sports is about content rather than delivery.

Of course, BSkyB tries to use its power in delivery to enhance its position in content, and vice versa. Regulators may be expected to oppose this power. These complex games are very interesting in relation to the long-term viability of BSkyB – but difficult to analyse.

To what extent does BSkyB’s viability depend on dominating both delivery and content? Many students focused on challenges to the delivery mechanism, or challenges to the exclusive sports deals, without asking how these might be coupled or uncoupled.

Which system?

veryard projects > business organization > case studies  > bskyb

This page last updated on June 28th, 2004 Copyright © 2004 Veryard Projects Ltd http://www.veryard.com/companies/bskyb.htm