Rupert Murdoch's push into continental pay-TV is, as is so often the case with the Dirty Digger, exquisitely timed. He has been on the run in Britain, following a fresh inquiry into his control of the UK pay-TV market and a bruising public debate over sport on TV. He seems far more welcome in Germany, where some of the continent's leading pay-TV companies have agreed to take his BSkyB on board.
The alliance of Kirch, Bertelsmann, and Canal Plus in Germany is a powerhouse. More interesting for the future, however, is yesterday's second bit of news from BSkyB: the formation of a strategic alliance with Bertelsmann, Canal Plus and Havas to develop digital pay-TV across Europe.
This is the growth area par excellence, although it will be hellishly expensive to develop and probably highly competitive. Better to do it with partners, then, as Murdoch is already doing in the US.
But don't expect this grand alliance to operate in the UK. BSkyB has no intention of giving up its near-monopoly, built up over the past five years and the source of so much of Mr Murdoch's UK profits. With subscription revenues approaching the pounds 1bn mark, making BSkyB easily the largest European pay-TV broadcaster, he will not want to share these lush pickings with partners. That means BSkyB is likely to drag its feet on the introduction of digital satellite television here until really pushed. The company is doing just fine with analogue broadcasting.
When BSkyB does decide to switch to digital, it will want to do so on its own terms and at its own rate. That means using its proprietary encryption technology and maybe even launching its own satellite for digital transmissions to the UK. Joint venturing is an excellent strategy for expanding into continental Europe, but hardly necessary at home.Reuse content