Sky is facing a bill for hundreds of millions of pounds after a blunder that meant it accidentally underpaid its advertising partners, it has emerged.
The broadcaster’s advertising sales arm, Sky Media, will have to recompense business partners such as Paramount and Warner Bros Discovery, after discovering earlier this year that it had miscalculated what it owed them.
Sky Media sells advertising space on its own channels as well as those owned by other major media organisations.
Earlier this year, the division discovered that it had significantly underestimated what it was supposed to have paid to the owners of those other channels since 2017, according to the Sunday Telegraph, which first reported the story.
The errors began before the company’s £30bn takeover by the American TV company Comcast but continued afterwards, Sky confirmed.
The reimbursements are understood to have been properly accounted for but not specifically referenced in public filings. Some staff have left the business as a result of the costly gaffe, the Telegraph reported.
A Sky Media spokesperson said: “When we became aware of an issue in relation to payments to partners, we acted decisively, conducted a thorough review process, proactively notified all partners, and are in the process of fully reimbursing them. We have made the necessary internal changes to prevent this recurring.”
The mistake shines an unflattering light on Sky’s competence relative to the UK’s other leading vendors of TV advertising minutes: Channel 4 and ITV.
In 2015, Sky Media held off a challenge from Channel 4 to secure the rights to handle the £250m-a-year ad sales business for Channel 5, which had been bought by Viacom the previous year.
Both Warner Bros Discovery and Paramount Global, formed by the 2019 merger of CBS and Viacom, could review their contracts with Sky after receiving reimbursements, the Telegraph reported.
In 2015, when Sky Media won Viacom’s business, Andrew Griffith, Sky’s finance chief and the managing director of the company’s commercial businesses, said the deal was proof of the value of products such as its localised ad targeting technology AdSmart.
“This is a big deal in terms of the validation of [ad] formats like AdSmart,” he said. “Why has Viacom gone with Sky rather than another player? Sky Media is seen as punching above its weight and as an innovator.”
Griffith went on to become a Conservative MP.
The Sky Media division was run until September last year by Patrick Behar, who left to become the global chief executive of the audience analysis business Kantar Media.
There is no suggestion his departure was associated with the payment miscalculation, which is understood to have been uncovered earlier this year by Sky Media, which informed its partners proactively.
Sky reported advertising sales of £1.2bn last year, from a total turnover of £10.2bn.
