Murdoch aims Sky high as he goes for the churn

Published on Thursday 3 May 2007 00:12

I'M seated in the canteen of one of Sky's call centres when James Murdoch, scion of the famous media family and head of BSkyB, comes over. "Hi, I recognise you from your photo in the paper", he opens flatteringly.

The 34-year-old chief executive of BSkyB has just spent a morning talking to staff at the broadcaster's call centre in Uddingston, near Glasgow, which employs around 200 people. Wearing a black suit and open-necked white shirt, Murdoch has even signed himself in as a visitor along with other callers to the out-of-town industrial park site.

Call centres - or contact centres, as Sky terms them - are a major part of the satellite company's business in Scotland: it currently employs more than 6,000 people at its two main sites in Livingston and Dunfermline. As we walk through the open-plan Uddingston centre, Murdoch tells me its job is to focus on customer retention. In TV jargon this is the drive to stop "churn", the rate of people closing their account with Sky - the broadcaster has an annual churn raate of just under 12 per cent, but yesterday he revealed that had increased to 13.7 per cent in the three months to March 31, from 11.9 per cent in the three months to December 31.

James Murdoch does not have his father's Australian accent but instead answers questions at length in a softer, cultivated American accent. Brought up in New York, James went to Harvard University but did not graduate, instead leaving to back the creation of hip-hop record label Rawkus Records, eventually bought by Rupert Murdoch's News Corp (which just yesterday launched a bid for the Wall Street Journal) in 1998. James was accelerated through News Corp, and in 1999 he took over Star TV, a satellite service aimed at China and South-East Asia. Despite grumblings of nepotism, he was regarded as having done a good job on an under-performing network and arrived at BSkyB as chief executive in 2003.

Broadcaster and journalist Andrew Neil, the man tasked by Rupert Murdoch with launching Sky in Britain in 1989, says: "James is a very pleasant and intelligent young man. He doesn't have his father's entrepreneurial buccaneering style, but he doesn't have to. He didn't build the company, he's just moved into it. James is much more of the 21st-century quite casual corporate manager."

Seated on a daytime TV-style sofa at the end of the Glasgow office, Rupert Murdoch's youngest son does indeed strike an informal note. He has been in Scotland to talk to newspaper executives about the changing face of media consumption. So how does he see the threat to print from the digital world?

"My sense is that most media companies and certainly the newspaper industry are awake to this, they are alive to the issue that customer demographics are changing, certainly the way people consume media and publish media themselves is changing, they way people define their own communities is changing. The question is, 'How do we grapple with that and what are the things we can do?' My whole thing at Sky has been it's not about barriers you put up, it's about how effective you are in changing yourself and finding new opportunities for growth."

He cites as an example broadband telephony now used by his own call centre staff, an area of business Sky only entered nine months ago. The broadcaster is currently promoting its own broadband product as part of the "See Speak Surf" package, bundling Sky TV, broadband and free evening and weekend calls into one offering.

So is Sky still a television company, or is it becoming an online player?

"We try not to say the words 'new media'. The distinctions between all these different sectors are fundamentally breaking down, you are seeing overlapping markets come to the fore. New media implies that there's old media and it's a static thing. For us, we are much more focused now on thinking about how our customers consume information and content across a continuum of different platforms."

He cites the example of movies downloadable to the PC, and Sky One on mobile phone as examples. "To say now new media is the top priority and sports broadcasting isn't really the right way to look at it. It's not a binary choice."

The polite Murdoch winces slightly when I raise the fact that Freeview, the digital terrestrial television system popularised through its cheap set-top box, is reportedly in more homes than Sky.

"You know we're a founding partner in Freeview and a member of the consortium? So the whole thing about them and us is a really curious thing. We've been present since its inception, we've been a contributor of channels and choice on the platform."

He is similarly unfazed when I ask whether a planned move of Sky News onto a paid-for channel on Freeview might hand a competitive advantage to the BBC's News 24.

"It would have viewer implications, yeah, but remember that Sky News has only been on DTT (digital terrestrial television) for a few years, it's not like in its history it was always this free channel.

"The binary relationship that the press, or the media commentariat like to think about, it's all about viewing share, Sky News versus BBC News 24. There is a lot more going on in the market place than that." He cites the fact that computers running Microsoft Vista will soon be able to receive DTT programmes as illustrative of the way the "distribution model" of TV is changing.

Content on platforms is not always a matter of strategy coolly decided in a boardroom, however. Sky is currently locked in a noisy dispute with Virgin Media over the cost of supplying its basic channels, such as Sky One and Sky Sports News. Sky pulled its channels when both sides failed to reach agreement over payment, and they have since pilloried each other in press adverts.

Murdoch clearly resents Virgin Media's campaign to depict Sky as a broadcasting bully.

"What's different here is that you basically have a company in NTL/Virgin that is so committed to their own PR profile and so committed to asserting their own Davids on to imagined Goliaths out there that they made the choice to make a huge public thing out of this rather than actually just pay for a product for their customers.

"It's very interesting, we were quite... we were surprised that is the calculation that they made. For us, we look at it and say, at the end of the day, what we do is invest in content and we try to sell it to customers in the best way we can. That's our business, right?"

He does, however, concede: "It blew out into the open, not anyone's finest moment, you don't like these sorts of things blowing out into the open."

So will it end in court? "We've made a huge investment in our content and we have to get a fair price for it. It's not just about cable and us. A court settlement is not... a court outcome certainly isn't the best way to do this."

As Murdoch sees me to the door, we again pass those tables of contact centre staff whose job it is to stop customers jumping ship. How those customers behave is on James Murdoch's mind more than punch-ups with other media companies.

"Customers go through a lot of different decision-making processes every day about a variety of products. The idea that the customer base and future customer base is static is not correct. Lives change, families change, decisions change, products change."