Report signals pay-TV slowdown

Shares in broadcaster BSkyB fell sharply today after a report said consumers plan to cut spending on TV channels in light of the credit crunch.

Findings from the market research agency Continental Research showed 18% of Britons plan to reduce their spending on TV channels over the next year.

And 6% intend to put off plans to sign up to additional TV services, such as movie and sports channels, as a direct result of concerns about the economic slowdown.

But the Freeview service, which provides free-to-air digital TV channels through an aerial, appeared to benefit from the financial gloom.

Of the 1,022 people surveyed, 15% have already got Freeview as a result of their economic worries and 13% plan to get it next year for the same reason.

But the report is bad news for subscription-based channels such as those owned by BSkyB and Virgin Media. BSkyB shares were down by as much as 10% today.

The situation looked different at the end of July, when BSkyB reported its highest level of new customers for five years in its fourth quarter – suggesting that hard-pressed consumers were choosing to stay in and spend more on home entertainment. It is due to release its next quarterly update on October 31.

Tim Barber, associate director at Continental Research said: “One of the truisms about how consumers respond to a challenging economy is that they go out less and therefore by implication spend more time at home, watching TV.

“What is interesting about this research is that it suggests many people are looking to save money yet further by cutting back on their monthly subscriptions for additional TV channels and services.”

He said this could be a result of the availability of free content.

“With video and TV available free over the internet, and the comparative ease and low cost of obtaining Freeview, there is an alternative – albeit without some of the premium content of the paid-for channels.”

He added: “With new ways of watching TV now available, the credit crunch could actually be the impetus that causes a significant change in peoples’ viewing behaviour.”