Seems I have opened a hornet's nest here!!

All I meant to say was that people should pay the same price for exactly the same service/product.

In reply to a post by Stevenage_Neil:

Seems I have opened a hornet's nest here!!

All I meant to say was that people should pay the same price for exactly the same service/product.

On everything?

Why?

I should have added all those with the same supplier should pay the same.............

In reply to a post by Stevenage_Neil:

I should have added all those with the same supplier should pay the same.............

Ahh - bit of goal post moving now.

Same question though:- On everything?

So, for example, if I buy Dettol (manafactured and supplied by Reckitt Benckiser), it should be the same price wherever I buy it from because it is supplied by the same company?

In reply to a post by JonDav:

That runs on the assumption that everyone who grabs a deal would've gone elsewhere or elected not to take any Sky channels via any operator otherwise, and Sky would receive zero revenue from them if they had gone elsewhere.

No "assumptions" at all, just merely facts on the business model that the TV side of Sky operates on. Once "break even" is met, from then on revenues are mainly profits. So no subsidising by anyone of anyone else, just merely some contribute less to Sky's bottom line than others once the "break even" figure is breached.

You assume that Sky are fine with 'break even'. They aren't; they have a target profit margin and their charges reflect this, hence some customers will subsidise others to reach this depending on individual profitability per customer.

No idea what you are talking about as far as revenues being profit once break even point is met. That's kinda what 'break even' is, the point after which revenues are profit.

Fluff it all you want. People paying less for the same services are being subsidised by those paying more, same as in every other enterprise. Whether this subsidy is towards a company being profitable or the level of that profitability is irrelevant.

Sky don't operate on the premise of breaking even, but making a certain level of earnings per share, and adjust their pricing and costs accordingly to ensure they reach the level of profitability their shareholders expect.

You actually pointed this out with:

just merely some contribute less to Sky's bottom line than others

Some contribute less to something than others, hence are subsidised by them.

It's not a big deal - some customers will naturally subsidise others due to the different levels of profitability on the different products and bundles that Sky supply, but to suggest that retention discounts aren't being cross-subsidised is absurd. Sky's ongoing charges across the customer base have to reflect some retention spend alongside every other variation in profitability else they undershoot the guidance they supply their investors.

Edited by deleted (Sat 03-Jan-15 19:19:32)

In reply to a post by Ignitionnet:

You assume that Sky are fine with 'break even'.

You seem to reading things in my posts which aren't there.

I just stated how the Sky TV business model works. No where have I even remotely suggested Sky (or any other company) would be "fine" with just breaking even.

In reply to a post by Ignitionnet:

No idea what you are talking about as far as revenues being profit once break even point is met. That's kinda what 'break even' is, the point after which revenues are profit.

Yet again you are failing to grasp what I actually put, rather you have addressed what you seem to think I put.

So, for example, with Sky on supplying TV to homes there are a fixed costs which are relatively static (not completely static though). Once that fixed cost base has been exceeded in revenues, then profits multiply at a high rate, whereas have revenues below those fixed costs Sky are then in trouble. A different business model is where product costs are per unit effectively, so the more units you sell doesn't multiply percentage profits anywhere near as much. Magazines, newspapers, etc. operate on a similar business model to Sky TV.

In reply to a post by Ignitionnet:

Fluff it all you want. People paying less for the same services are being subsidised by those paying more, same as in every other enterprise. Whether this subsidy is towards a company being profitable or the level of that profitability is irrelevant.

"Dodgy" logic, plus a failure to understand how the business model of Sky TV actually works, doesn't make your assertions correct. Fact is that nobody is subsidising anybody else, and whatever prices people pay to Sky for TV just go towards their bottom line, once any break even cost base is breached. There are no robbing "Peters" to pay "Pauls".

In reply to a post by Ignitionnet:

making a certain level of earnings per share, and adjust their pricing and costs accordingly to ensure they reach the level of profitability their shareholders expect.

You seem to have totally ignored that most/all companies have to contend with competition, so prices for products/services have to be acceptable to customers, or no matter what fanciful prices any company would like to set based on shareholders expectations are pie in the sky (excuse the pun). Obviously in the "real world" usually a compromise on shareholders expectations and actual reality comes into play.

Anyway different types of shareholders expect various and different things from their investments, ranging from just high capital growth, through to growth plus income, or to just a highish income with little concern to capital growth.

As I'm clearly dealing with an investment analyst whose specialism is pay TV, alongside a specialism in ignoring the blatantly obvious with some dabbling in ignoring the meaning of words in the English language I'll leave you to it, Jon.

While I could deal with your points in turn there appears to be no point as your basic premise for your comments is incorrect, and your defensiveness is bizarre.

Edited by deleted (Sat 03-Jan-15 22:13:48)

In reply to a post by Ignitionnet:

As I'm clearly dealing with an investment analyst whose specialism is pay TV, alongside a specialism in ignoring the blatantly obvious with some dabbling in ignoring the meaning of words in the English language I'll leave you to it, Jon.

Most investment analysts are about as relevant to reality as pink unicorns are.

You obviously have some comprehension issues concerning the type of business model that Sky TV operates on. If you add to that totally inaccurate statements of what I was explaining (i.e. saying I was "fine" with Sky just going for "break even", when I never posted any such thing).

I suppose using "analysis" based on lack of comprehension, plus reading things that never existed, is bound to lead to arriving at completely erroneous and nonsensical conclusions.

In reply to a post by Ignitionnet:

While I could deal with your points in turn there appears to be no point as your basic premise for your comments is incorrect, and your defensiveness is bizarre.

Which points? The points I actually posted, or the "points" you made up I posted?

Jon is clearly correct. Sky TV is extremely overpriced and many people don't see the value in paying full price. Many people are happy to pay the overpriced fees because they do think it is value for money.

Sky take a view that they will discount to those who don't think it is value for money as their TV costs are fixed.

In my own case, I 'haggled' half price TV for two years because I didn't think full price was value for money. In the end I cancelled because i didn't think half price was value for money either.