Satellite TV Stage Two ups the risk stakes 

24 August 2020 tbs.pm/70742

From The (Newcastle) Journal for 26 April 1990

Sunday sees the full launch of BSB, Britain’s second satellite broadcasting station — eight months late and more than a year after its rival Sky. Second only to the Channel Tunnel as the biggest private investment project in the country, BSB involves huge amounts of money and risks, as GORDON MORRIS has been finding out.

SATELLITE television could become the entertainment industry of the 1990s — or a new black hole in space for millions of pounds of investment.

Sky TV has been up and running now for just over a year with four channels and has been losing enormous amounts of money — currently £10m [£25m in 2020, allowing for inflation] each month — for News International and its boss Rupert Murdoch. On Sunday, its rival British Satellite Broadcasting finally comes on full stream with five channels after a succession of delays. It, too, expects to lose many millions of pounds.

So why bother? And how can BSB hope to succeed where Sky has so far failed?

Both Sky and BSB believe that over the course of the next five to 10 years they will be able to persuade enough of us to buy their satellite dishes and tune into their ‘space stations’. They think we will change our viewing habits as more channels come on stream and the choice becomes greater.

BSB plans to invest £1.3 billion [£3.3bn] by the mid-1990s to back this conviction. That could see its backers losing between £600 and £700 million [£1.5bn to £1.8bn] before they begin to see any upturn somewhere round about 1993, and it could be 1996 by the time they see any real return on their investment — if at all.

“We have always worked on the basis that we must make a long-term investment and that it would be a long time before we saw any return,” says Edward Bickham, BSB’s director of external affairs.

“Murdoch had no idea how much he would lose. We, on the other hand, have always seen the need to invest a huge amount of money before we would see any return.

“The £1.3 billion we are putting in makes us second only to the Channel Tunnel as the biggest private sector investment project in this country. That is the scale of the commitment we are making.”

Rupert Murdoch admitted last year that Sky was losing £2m [£5m] a week, and his News International group has seen a £64m [£161m] downturn in profits in the most recent six monthly figures

Despite the shaky start Sky still believes it can succeed. It now claims an audience of 1.3m households in the UK and the. Irish Republic, and has recently won six major multi-national advertising contracts. But still the cash floods out.

Murdoch is reported to have made a five-year £300m [£755m] commitment to seeing Sky succeed, but on present form he may have to dig much deeper into his pocket or accept defeat.

Sky’s Amstrad and Alba dishes at about £200 [£500] each plus installation (or £23.30 [£60] a month rental, including films subscription) are beginning to appear in greater numbers outside homes, but as yet at nothing like the numbers that were being forecast at the station’s launch last year. That has led to a widespread view that Sky has flopped.

Fiona Waters, in Sky’s press office, dismisses any such notion. “If you realise it took ITV seven years to get into profit, there is no basis for saying Sky has failed.

“When you are starting a big new media operation it takes a great deal of money and time to succeed. In the first few years you have to start to build up your network. There is no way you can turn an operation like this into a big money earner overnight. In a few years time we will start to make sizeable revenues.”

Both BSB and Sky believe they have the right programme mix to attract the new audiences. Big name stars are bandied about by both stations to justify their claims.

LOUISE Smith, Editor of Satellite TV magazine, thinks there is a potential audience over the next five years of 2½m or perhaps a little more. She thinks success will go to the station with the best mix of programmes and technology.

On the technology front BSB seems to have the edge over Sky. Although it is highly technical, this boils down to the difference between the D-mac system being employed by BSB and PAL used by Sky. D-mac is the more advanced and more expensive, but promises to bring the best of the future high-definition viewing that satellite broadcasting will be able to offer over terrestrial transmission.

BSB’s “squarials” are half the size of the Sky dishes yet are more costly at £350 to £380 [£880 to £950] each, plus installation (or £12.99 [£33] a month all-in rental). They are being made here in the North-East by Marconi at Gateshead; another even smaller type is being made by Channel Master at Blackburn, Lancashire.

Edward Bickham says they plan to have 35,000 receiver units in the shops by the April launch date and 100,000 by the end of May. These receivers are all-in units, unlike those for Sky which up to now have required an additional decoder for the movies channel.

Courtesy of TV Live

BSB delayed its launch due last September to make improvements to the receiver units after technical problems, and to ensure they would not need additional equipment. Recently Amstrad announced they too had developed all-in units for future Sky customers.

Technology aside, it then boils down to straight competition between rival programme-makers. Here Fiona Waters at Sky believes their rivals are still an unknown quantity — “Anyone can look wonderful on paper until you see the final thing.”

She claims that Sky One, the main entertainment channel, already has the upper hand by being there first and winning an established audience. BSB will be fielding Galaxy Channel with stars like Trevor Eve in Shoestring and cult series like Hill Street Blues in opposition.

Fiona says Sky News, with its 24-hour service, has a definite edge over what BSB will be offering. She describes the service as “heavyweight” — an arguable point — although its large 250 staff and worldwide links is certainly to be reckoned with.

On the films front Sky Movies with its powerful back-up from the Murdoch-owned 20th Century Fox and other tie-ups will be competing with the Movie Channel (£10 [£25] subscription), which is making great play of its efforts to commission new work from smaller independent British film companies, and encouraging other homegrown products. Movie Channel has also invested millions for the rights to 1,730 Hollywood films, from makers such as Paramount and Universal Studios

BSB’s Channel for Living has, on paper, a strong crew with the likes of Sir Robin Day, Selina Scott, David Bellamy, Nina Myskow and Dr Miriam Stoppard. This, agreed Vicky Thomas at the BSB press office, could be seen as a somewhat more upmarket offering against Sky — “we are keen on providing quality viewing”.

And Vicky was eager to emphasise her station’s bid for younger viewer on the Galaxy Channel. With presenters such as Floella Benjamin on Playaround and other programmes like the “inter-active computer adventure” The Satellite Game, they again look to have an edge.

“We have tried to appeal to all tastes,” said Vicky. “We are spending £S½m [£13.5m] on original children’s programmes. Sky has nowhere near the commitment we have to children.”

“Soft launch”: BSB’s print advert for their launch via cable

The Sports Channel from BSB is up against Eurosport, which serves a wider European audience. Sports Channel looks to be strong in areas such as golf and tennis, and promises peak-time action from major events and a sports newsdesk four times a day.

Gary Double at BSB commented: “Our sports service will be demand led. Eurosport is led by supply.” By that he means that they will be covering major events in peak time, not relying on whatever sport is being supplied at any particular time.

Fiona Waters was in no mood for conceding. “Competition will be good for the industry. Ultimately the final decider will be the ratings. At Sky we believe we have the right mix of programmes for the British audience and we have over a year’s start on BSB”

Ultimately the final decider will be the marketing men from both stations and whether or not they can persuade enough of us to buy their dishes or link up through cable. There are only so many hours in the day and at present the average household has its TV on far something like 5.4 hours.

Terrestrial TV from ITV and the BBC will fight hard to retain the present market share. Edward Bickham says BSB will need a potential audience of three million households to become profitable. Many of these will come through cable networks as well as home dishes.

When BSB launches it will have an automatic cable access to 130,000 households under British Cable Authority arrangements. Of Sky’s claimed 1.3m audience about half is tuned in through cable.

Courtesy of Andy Clewes

Sky, optimistically perhaps, expects its audience to grow to 2½m by next year. Fiona Waters quotes Saatchi and Saatchi research saying that by the turn of the century 60pc of UK households will be linked to either cable or satellite TV.

Sceptics would say that the evidence of their own eyes belies existing claims about the number of households with dishes But Dixons in Eldon Square, Newcastle, one of the major outlets for Sky dishes, says business is steady. They are selling between 20 and 30 dishes a week at that one branch and there has been no tailing off in demand.

So will satellite TV be an eventual success? Perhaps the answer lies in the stars.

❛❛Russ J Graham writes: On paper, BSB had the better offer. Their programming was higher quality, their system cheaper to rent, their shareholders diversified and with deep pockets, they had really good quality marketing, and the D-Mac system was visibly better than PAL.

But only on paper. In the real world, they mostly had repeats, their system was expensive to buy (the middle classes the service was aimed at had by and large ceased renting such equipment), their shareholders liable to bicker all the time, the marketing looked great but the petty fiefdoms created by having individual channel controllers shone through, and the D-Mac system meant nothing to anybody except a feared extra layer of complexity.

Despite that, they may have survived and even prospered eventually, were it not for the unexpected – but entirely foreseeable – arrival of competition. And competition in the guise of Rupert Murdoch, with five national newspapers prepared to talk Sky up and BSB down and the ear of the then-Prime Minister, was going to be hard to beat.

Yes, Sky was very much downmarket. But working class viewers their programming targeted were more likely to rent TV equipment and more likely to spend money on getting more TV – when you have little money, you spend a higher percentage of it on entertainment because not having much money means not being able to afford much entertainment. Having your 4 channels double to 8 for £23.50 means not spending money out of the house in pubs and cafes: you stay home, saving far more than you’ve spent on Sky.

BSB’s other problem was also competition-based. Once installed, the system was free: money other than advertising cash was made by The Movie Channel being on a subscription. But the films were old – older than video age – and most people already had membership of a video rental shop. Why spend £10 a month on films chosen for you when you can spend £10 a month on newer blockbusters that you choose? The convenience of not having to go out to the shop is a very small one.

This also affected Sky, of course, but Sky had a great deal with 20th Century-Fox, unsurprisingly, for cheap access to their vaults. They could run Sky Movies as a loss-leader far longer than BSB could run The Movie Channel at a loss when it was supposed to be a profit centre.

The two eventually merged less than 6 months after this article – a takeover in all but name, since Sky was handed the keys to the new ‘joint venture’ – and, with a huge bid for football rights in 1992, something people will pay extra for and happily, the new British Sky Broadcasting was about to become the dominating media machine we now know.