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How failure to adapt led to SIS Live’s OB demise

How failure to adapt led to SIS Live’s OB demise
News
David Wood
23 October 2013

The news that satellite service provider SIS is to shut down the OB division it acquired from the BBC in 2008 has been lamented by some.

But why has a company that was prepared to pay a rumoured £20m plus to get into the OB business five years ago, and later went on to acquire Dales Broadcast and O21, now made a hasty exit?

Of course, SIS Live’s overdependence on BBC work meant that it was always going to struggle if that work went elsewhere, which it did in September when SIS and the BBC were unable to agree terms for a new deal.

SIS chief executive Gary Smith argued that it was pressure from primarily the BBC to force down prices that made the business untenable.

But was it the BBC forcing down the price or SIS’s inability to adapt to what many consider to be commercial realities?

Much industry reaction has been critical of the way SIS managed its OB arm.

Outdated practices

One observer commented that when SIS Live took over BBC OB's they had a prime opportunity to bring the company up to date in terms of facilities and working practices – but failed to do either. 


“The era of two or three rigs days before an OB has moved on (since technology has become increasingly reliable) yet SIS still insisted on these [practices] and working strictly to book when it came to the working day. Sorry SIS Live, you and your old fashioned ways let you down," they said.

Anecdotally SIS Live OBs did employ different operational practices, such as completely offloading a tender on return to base.

Furthermore, every item on an OB was bookable from stores, which mean scanners could take much longer to rig.

The workforce – although highly skilled – was also less flexible and multi-skilled across the board compared to those used to working for the independent OB market, claims one OB provider.

SIS’s ambition to make the business work was not helped by the terms of the 2008 acquisition which meant that under TUPE regulations (The Transfer of Undertakings - Protection of Employment - Regulations 2006) SIS had to take on the huge overhead of a 200-strong workforce.

Most OB companies have lower staffing levels, with a core workforce boosted with freelancers who are taken on as the need arises, which avoids payroll costs during downtime.




“The OB companies at the time knew the true value of BBC Outside Broadcast. In 2008 it was widely considered to be £1 when its obligations were taken into account."

"SIS only got BBC OB because it agreed to take that on,” says the source.

“Reading between lines it’s clear that over the last five years the keenness of the SIS board to maintain an OB business has evaporated.

While the company’s turnover has gone up through the addition of the BBC OB contracts, its bottom line has gone down.“

“Because SIS had to accommodate both existing working practices and staff they struggled to make it work.”

What next for SIS Live?


The 2008 acquisition – which introduced a new player into the business – was a deal which swam against the tide of an otherwise consolidating market. 

But while selling SIS Live’s OB division lock, stock and barrel as a going concern may be the company’s preferred option, a firesale looks more likely – particularly as any potential buyer will face the same TUPE obligations.

Says one source: “I would be very surprised if anybody with their head screwed on would go for it." 

"Maybe SIS has four or five OB trucks that people would be interested in, but I doubt if anybody will want it as a going concern.”

SIS Live will continue to operate, however, as a satellite uplink services business, providing satellite news gathering to Sky, ITN, ITV and others, using its fleet of uplink trucks. 

It will also service the broadcast requirements of SIS Betting from racecourses across the UK and will continue to deliver advanced stand-alone satellite systems to news and military markets.

SIS also remains the main provider of television coverage and data to the betting industry in the UK.

Who will do the BBC's OBs? 

The turning point for SIS came in September when the BBC decided that it was going to split up its major events and sports contracts between four UK OB suppliers.

In reality sharing out public service OB contracts across the industry is a much more politically sensitive way of handling OBs than relying on one company.

It instinctively appears much fairer than handing rugby, tennis, football, athletics and Formula 1 contracts to a preferred supplier.

From March 2014 NEP Visions, CTV, Presteigne and Telegenic will all get a slice of the BBC’s huge swathe of sport, with the Open Golf contract still tba.

NEP Visions – Athletics, Tennis, Wimbledon
CTV – Football, London Marathon, The Boat Race
Presteigne Charter – Formula 1
Telegenic - Rugby League, Rugby Union

Perhaps hiving off contracts and splitting up the company  was always going to be the future of SIS Live/BBC Outside Broadcast – it’s just taken five more years to get there.




All comments
Gareth
Gareth  | October 26, 2013
As someone who used to work for SiS Live I think some of the myths here ought to be dispelled.

BBC OB's then SiS Live were the dominant market provider in the field of OB facilities. This meant that they had to be absolutely circumspect and could not loss-lead on any of their contracts, even if it was commercially astute to do so.

The SiS Board invested tens of millions of pounds in new trucks and equipment until very recently. This summertime they took on several new trainees and craft managers. The "keenness ... to maintain an OB business" only evaporated with the loss of the BBC Sport contracts.

The workforce was cost effective and flexible enough to win non-BBC work as well as service the very low margin BBC contracts. The costly post-BBC pension scheme was terminated in 2011 and OB staff voluntarily took a 10% pay cut on top of no pay rises since 2008. Your source would not have found SiS Live staff kipping in their cars after an overnight drive from Newcastle to Plymouth Argyle, that is true. A large number of very talented SiS Live staff left in the 2011-12 period and I would suggest it was the inability to provide certain named individuals on BBC Sport contracts that was the start of the dissatisfaction with SiS Live rather than any equipment, cost or staff flexibility issues
 
Anonymous
Anonymous  | October 25, 2013
I think you'll find that was a quote from an outside source, not David himself.
 
Andy
Andy  | October 24, 2013
I assume David is trying to be controversial with this article but he should be a bit careful with his comments such as,
"The era of two or three rigs days before an OB has moved on (since technology has become increasingly reliable) yet SIS still insisted on these [practices] and working strictly to book when it came to the working day."
It may be common practice for companies to sometime flout driving regulations when getting to sites and to expect freelance staff to do so, driving after long days and with little sleep. However it against the law to have less than an 11 hour break between turns of duty and I am not sure that David should be encouraging this practice.


















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