In Germany we don’t have HBO or Showtime. The leading premium television networks here is Sky, a subsidiary of 21st Century Fox, and I like Sky, I really do! The company makes many bold investments: in the first broadcasting rights for feature films, in elaborately produced documentaries on the Sky Doku channel or the History Channel, in the ridiculously expensive broadcasting rights for the German soccer league (Bundesliga). Sky was a pioneer among the first HD broadcasters; it has offered streaming apps for smart phones and tablets for nearly three years. And all this has been funded without advertising and without the greedy leeches at the German collection office for TV licensing fees (GEZ), who just distribute those licensing fees among the government owned TV-stations.
Another reason Sky has earned my respect is that they have kept entertaining us since 1990 even though they had only posted losses every year until 2012. I do not even want to know how much money investors threw at the company before Sky was first in the black in 2013.
But, with all my respect for Sky, there is one thing that really drives me up the wall: their aggressive strategy for acquiring new customers – it is not only extremely unfriendly to customers but even stands on the margins of what is legally permissible.
(1) Packages are advertised at supposedly discounted prices (“Now only 29.90 EUR instead of 34.90 EUR”) without pointing out that, in exchange, some services have been removed from those discounted packages. This is an approach that won Sky Deutschland Fernsehen GmbH & Co. KG a temporary injunction a few weeks ago with the Munich County Court (case no. 1 HK O 19035/13). And rightly so: § 5, paragraph 1, no. 2 of the Law Against Unfair Competition (UWG) forbids untruthful statements regarding the availability of a specific price advantage, which is ultimately what Sky has done here.
(2) Sky has also teamed its aggressive advertising campaigns with its fairly uncompromising Customer Care Service.
One of our clients had fallen for exactly the promotion described above, but did not want to give up the “SkyGo” streaming service that was not included in his package. The attempt to reach an amicable agreement with Sky’s customer service was unsuccessful. Our declaration that we would avoid the contract for fraudulent misrepresentation was ignored by Sky. Fortunately, time was in our client’s favor. After a while, the unpaid monthly fees our client was charged reached an amount that required Sky to decide between (a) taking legal action regarding the subscription fees that had accrued, or (b) attempting to reach an amicable agreement. Making a claim to these fees was a risky move for Sky as we had challenged the conclusion of the contract on the grounds of fraudulent misrepresentation. So Sky ultimately decided to go with the amicable agreement we proposed and gave our client the full services in the 34.90 EUR package for 29.90 EUR.
(3) We won’t even get into the clause Sky formerly used in its terms and conditions stating that Sky was permitted to raise their prices on a whim once the minimum contract period was up (“the sky’s the limit…”). The Federal Court of Justice had already overturned this in 2007 (BGH, judgment dated 11/15/2007, III ZR 247/06). Of course, Sky drew their consequences: they simply thought up a new, legally permissible, but ultimately even fouler variation on this price increase: By signing the contract, a firm agreement is entered into whereby after two years prices will always be raised to an amount (more or less explicitly) specified when concluding the contract. Now, if the customer doesn’t listen carefully or is blinded by the promotional pricing, it’s his own fault. The most common case will likely be that the customer does in fact understand the price increase when he signs the contract, but at some point during the two-year contract term, he forgets about it and is then only reminded when he is suddenly charged the increased price. But by then it’s too late and he is again stuck in a contract that has just extended for another two years.
(4) Sky’s sledgehammer approach to acquiring new customers escalated a few weeks ago when Sky started sending unauthorized cease and desist letters to restaurants. The affected restaurant owners had shown games of the 2nd German soccer league aired by the ZDF or Sport1 channels. Sky sent the letters on the grounds that they own the exclusive rights of public display for these games. The cease and desist letters were combined with four-figure indemnity claims, which would then be “cooperatively” reduced if the restaurant owners signed up for a subscription with Sky. If this weren’t so bitter for the poor restaurant owners, such audacity would be simply laughable.
We would urge those affected to file a negative claim for a declaratory judgment to show Sky that those who constantly give it must also be in a position to take it. Because: these cease and desist letters were of course illegal. Sky has since conceded to this point. Sky would only be entitled to send cease and desist letters to the restaurant owners if the broadcaster had the exclusive right of public display. But: If shows are aired on Sport1 or ZDF, this is obviously not the case.
I’m just wondering when Sky will finally come to its senses regarding customer acquisition. Their product is truly good enough that they do not need to resort to advertising methods that are reminiscent of subscription traps on dubious internet sites.