Out of time 

1 June 2001 tbs.pm/1683

At the start of the 1990s, the first major consolidation of broadcasting since the establishment of Trident as the owners of Yorkshire and Tyne Tees in the 1970s took place.

The UK-licensed service British Satellite Broadcasting was haemorrhaging money so fast they had no choice but to merge with Sky Television, the non-licensed satellite broadcaster who were losing cash just as fast but had deeper pockets.

The merger all but erased BSB from the map, as the new company – British Sky Broadcasting – contained virtually nothing of the old.

A decade later, and a new battle is being fought over similar territory in similar conditions and even with similar players.

Sky Digital

In the red corner stands the champion, Sky Digital. Undefeated in its previous match, Sky has used its huge marketing skill – making use of the Sun and the Times newpapers – plus a large existing analogue base to gain subscribers to the digital service.

The main thrust of the marketing of Sky Digital has been in two directions. Firstly, existing Sky customers are induced to ‘upgrade’ with special offers and the threat of the imminent closure of the analogue system.

Secondly, brand new customers are encouraged to ‘go digital’ with the promise of quality television – history, comedy, sport – and the new interactive features. This encouragement also includes a free digibox and heavily subsidised installation, starting from a flat fee of £40.

ITV

In the blue corner stands the challenger, ITV Digital. This system has gone from a standing start to a million subscribers – but with a deal that looks less good on the outside than that offered by the champion.

The box is free to rent (not to own) and only with a subscription. The picture quality is subject to degradation in poor weather, the channel line-up is in the teens rather than the hundreds and the technology in the box is actually older than Sky’s.

But ITV Digital is desperate in a way Sky no longer needs to be. Although no longer making the profits it made before the digital investment, Sky seems guaranteed to survive unless a particularly fearless government appears that is prepared to stop it.

ITV Digital’s plight is far more precarious. Having dipped their toes into the digital waters with ITV Digital, subscribers have a habit of jumping to the allegedly superior Sky after a year – 22% at the last count. ITV Digital is also heavily dependent on the future of free-to-air services, while Sky’s profits are from pay-TV.

And, worst of all, ITV Digital is heavily tied to ITV-proper’s success, being co-owned by the two biggest ITV players, Granada and Carlton.

Since Carlton finally, after more than a decade of trying, gained access to British television in 1993, Granada has seen the company as enemy number one.

Granada has been quick to use its financial muscle to buy up any English ITV companies that come on the market before Carlton can manage it.

Granada has slimmed down from a multi-market company into a plain and simple “integrated broadcaster” in order to fight Carlton most effectively.

But both Carlton and Granada have come to recognise that the biggest enemy is probably not embodied in each other. While the two were at daggers drawn, they attempted to make peace by getting into bed with Sky at the formation of ITV Digital.

But the government wouldn’t have it (and neither would Sky’s worried shareholders). And while competing to dominate ITV, the two took their eye off the digital ball. And Sky romped home with the trophy.

The evidence has been clear for some time. In multi-channel homes, ITV is withering on the vine. In terrestrial-only homes, whilst ITV may enjoy being the most watched channel, its audience approval rate is very low. Its audience is notoriously disloyal – disappearing off to other channels in the blink of an eye.

This latter point ITV blames on the 12-frame gap between adverts, but this seems highly suspect. More likely is that there’s only so much Who Wants To Be A Millionaire anyone can stand before they head off for something different.

And yet the network milks any format they find successful until there’s nothing left, creating a viscous circle that crushes innovation.

All of this now seems to have become apparent to ITV’s two prime movers. ITV is finally to join Sky Digital, the arguments about cost and technicalities cast aside when the BARB figures reveal that digital households who turn over simply don’t come back.

But what of ITV Digital? Well, here’s the biggest consolidation yet. While Trident may have been a huge deal at the time, and BSB-Sky even bigger, Granada merging with Carlton is, for the time being, a legislative impossibility.

Yet the two have to set aside their differences unless they wish to be roasted alive by Sky and watch from the sidelines as the BBC takes the high road in digital expansion.

The solution, borne of this sudden and new-found co-operation, has been to relaunch the service (from ONdigital as ITV Digital), making use of the ‘power’ of the ITV brand.

But the ITV brand is in decline, and the accession of ITV as a set of channels to Sky Digital is a sign that they know they are looking down the home stretch of their existence. One hopes ITV, how ever it ends up, will be gracious in defeat.

[Since this article was written, ITV Digital has closed and has been replaced, after a prolonged wait, by a free service called Freeview and a small pay service called Top Up TV]

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