UK Gambling Ad Ban Leads to Losses for Sky
Media giant Sky has suffered a downturn in advertising revenue due to the UK’s gambling advertisement restrictions. The ‘whistle to whistle’ ban, which was brought in last August, aims to protect children from seeing gambling ads. Gambling ad constraints in Italy have also had an impact on the company’s revenue.
Comcast Corp, the American cable group that owns UK company Sky, reported a 4.2% drop in revenue in the third quarter of 2019. A large proportion of this is due to a 13.8% fall in ad revenue. In the third quarter of 2018, its advertising revenue came to $545 million. A year later, in the third quarter of 2019, it had fallen dramatically to $446 million. These figures come from the first quarter to see the UK gambling ad ban come into effect.
Comcast, which is worth an estimated $210 billion, completed its takeover of Sky in October 2018. The £30 billion deal has enabled Comcast to compete with media heavyweights of Silicon Valley, Netflix and Amazon. Comcast beat 21st Century Fox, which had the backing of Disney, in the sealed-bid auction. Comcast’s Chief Executive, Brian Roberts spoke about the merger at Sky’s West London headquarters.
“Neither company had enough scale in this new world. Together we have much better scale.”
A year has now passed since the big takeover. With these significant revenue losses being reported, does Brian Roberts regret taking on Sky? That doesn’t seem to be the case, as the Chief Executive described his positive outlook on the business’s “strong global footing just one year after the Sky acquisition”. He maintained that Sky is “in a unique position to compete, including in the streaming market”.
It hasn’t been a bad year overall for Sky, since being taken over by Comcast. Advertising makes up just 9.8% of Sky’s revenue. While the losses are not inconsiderable, it is not a massive setback for the company. The company has added 317, 000 customers this year and further growth is forecasted. Sky has seen an overall revenue increase in its third quarter of 0.9%, bringing the total to $4.6 billion.
Comcast did acknowledge that Sky has suffered as a result of the UK’s ‘whistle to whistle’ ad ban. The US conglomerate cited “an unfavourable impact from a change in legislation related to gambling ads in the UK and Italy as well as overall market weakness” as the main culprit. Sky CEO Jeremy Darroch also warned of comparable concerns for the market in Germany, as similar restrictions are being prepared.
“On ad revenue, I’d say broadly about one-third of it is market – TV market. Advertising markets in Europe, as you know, are pretty much all under pressure with mid-single-digit – perhaps a little bit more – declines year on year. And probably the balance of it is really down to gaming legislation change here, which is specific to the UK and Italy; [it] hasn’t arrived in Germany. We’re probably disproportionately affected by that, of course, because we’ve got such a strong sports business and [we are] the sports leader in Europe. That will work its way through over the course of this year”– Jeremy Darroch, CEO, Sky
Italy’s “Dignity Decree”
On January 1st, Italy brought in the “Dignity Decree”, or “Decreto Dignità”, which included a blanket ban on gambling advertisements and sponsorships. The legislation was created to overturn the previous government’s ‘Jobs Act’. One of its fifteen articles called for the outright ban of gambling adverts across all media platforms. This proved to be controversial with those working in the gambling industry and political parties alike.
The main concern is that banning all gambling advertisements will result in the return of illegal gambling. While the law is intended to combat gambling addiction and protect consumers, it could have a negative effect.
“The Government lacks knowledge of the market, they don’t understand how online gaming can be strictly controlled, players can ban themselves from gaming sites, operators can recognise addiction and block players. Artificial intelligence can also play an important role in preventing addiction and problematic players. ”
The “Whistle to Whistle” Ban
The UK gambling ad ban that Comcast refers to was introduced at the start of this year’s Ashes games. The ‘whistle to whistle’ ban prohibits gambling advertisements from being aired during live televised sports events. The time frame runs during the watershed and from five minutes before a game starts until five minutes after it has ended. Sponsorship of TV programs is also included in this definition of advertising.
The gambling ad ban is a voluntary measure, which aims to address concerns over the impact of TV gambling adverts on children and vulnerable people. It has been added to IGRG’s Gambling Industry Code for Socially Responsible Advertising
This ad ban came 12 years after the 2005 Gambling Act came in, which allowed bookmakers and online casinos to advertise on TV for the first time. Since then, attitudes have changed as online gambling and sports betting markets have grown. The amount of televised live sport has also grown considerably, providing more opportunities for betting and gambling adverts to be aired.