MEDIA: BSkyB stands on the edge of 21st century domination

When John Birt, the director general of the BBC, gave the keynote lecture at this year’s Edinburgh Television Festival, he described in dramatic terms, the way in which ‘BSkyB now stands poised to become the dominant financial force in our industry by the turn of the decade’.

When John Birt, the director general of the BBC, gave the keynote

lecture at this year’s Edinburgh Television Festival, he described in

dramatic terms, the way in which ‘BSkyB now stands poised to become the

dominant financial force in our industry by the turn of the decade’.



This view has been underlined with a vengeance in the last few days by

the stock market’s belief that the upstart company, which only moved

into profit four years ago, could undoubtedly muster the financial

firepower, should it desire, to mount a takeover bid for blue-blooded

and sluggish Pearson.



What needs to be spelled out is the form BSkyB’s future dominance will

take. Most reporting of BSkyB centres on issues such as sporting rights

and new channels. Sky’s key sports contracts do provide the ‘battering

ram’, as Murdoch himself put it last week, for driving into the global

subscription market. BSkyB’s switch to escalating profits was directly

related to its Premier League deal in 1992, and the immediate success of

the sports pay channel. The subsequent dramatic profit growth fuelled

its flotation and rapid share price rise: its stock market value is now

double that of Pearson.



But what few people outside of the 4,000 who work for BSkyB realise is

that programming is only one plank in its development. It is poised to

sanction the manufacture of the new customised digital satellite

decoders - the black box which will sit on top of TV sets and allow

access to hundreds of channels.



These are in a different league to current decoders as, for the first

time the sets will contain a modem and a return data channel for

interactive communication. They will allow the householder and BSkyB’s

subscription management centres the means to conduct a huge variety of

secure transactions instantly, such as pay-per-view and home-shopping.



This is why some powerful corporations are preparing to make common

cause with the broadcaster, and quite possibly help subsidise the

decoder, to ease the cost for consumers discarding analogue for digital.

The modem and return channel technology can be used either to distribute

entertainment to TV screens, or business-to-business services on to

personal computers. BSkyB, in other words, is developing into a

formidable direct-to-home marketing machine, and will use its encryption

and subscription management skills in a myriad of new money-making

services. David Elstein, who recently left BSkyB to head up Channel 5

remarked last week that ‘if you think BSkyB is big now, wait for three

years’ time’.



Whether or not it swallows any or all of Pearson’s media interests, the

message is clear: of all the UK’s media companies, it is BSkyB which is

brilliantly positioned for the 21st century.



Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.