Amid all the hype about hundreds of digital TV channels let’s focus
on what is really happening in the marketplace. Since March, four
satellite channels have either closed or are about to. The Weather
Channel, the Children’s Channel, the Country Music Channel and Sky
Scottish have all failed to attract enough support to be viable.
Yet, quietly, the new National Geographic Channel, backed by the famous
magazine and BSkyB has been making inroads. With its emphasis on
expeditions, anthropology and animals, it is fast becoming one of the
UK’s top ten prime-time basic tier channels and last week signed a
production deal with Carlton TV.
All this is a taster of what to expect - more closures among the weak,
but new launches too. Boom and bust looks inevitable if the Independent
Television Commission’s bold new policy rewriting the rules on the
’bundling’ of pay-TV is implemented this summer. In effect it ends the
system whereby minority channels of indifferent quality could piggy-back
on stronger ones, through monthly subscriptions.
In a shift (assisted by a desire to show it can stick up for consumers),
the ITC has said that it is not in the business of propping up
This represents a big change from last year’s priorities when it was far
more worried about pursuing any policy which could be construed as
depriving viewers of choice. Now it is insisting that current practice
of lumping together big bundles - premium-priced movie and sports
channels (all run by Sky), with the basic cheaper ones (dependent on a
mixture of subscription and advertising) must end, though it stops short
of allowing consumers to mix and choose a la carte.
The ITC ruling seeks to demolish a concept called ’minimum carriage
requirements’ which Sky has used to force cable companies to supply 80
per cent of subscribers with all Sky’s basic channels, restricting
competition. What has strengthened the ITC’s resolve is that several
cable companies are experimenting with cheap mini-bundles of som e ten
channels, for a modest monthly fee and have been rewarded with above
average growth. It has resulted in take-up rates of around 40 per cent
per franchise, a figure never before attained.
So where does it lead? Oddly, Sky could emerge with its power enhanced
because its network may surge with cheaper ’mini-bundles’. And, unless
an exemption is granted, pure cable channels, such as Live TV, with
contracts guaranteeing carriage may be scuppered. Further down the line,
even premium movies and sports channels may be squeezed if pay-per-view
movies and sports events spread.
I’m with the ITC on this one. Let competition rage. Multi-channel TV
belongs to the leisure sector. It is not an essential utility. Life goes
on without a Weather Channel.
The consumer has voted. Or, as the ITC puts it, current ’bundling
practices’ may be preventing a more rapid spread of pay-TV.