Murdoch set to win again

ONdigital must be careful not to repeat BSB's failure when it took on Sky, but the omens are not looking good, warns Jonathan Miller
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The Independent Online
"HISTORY does not always repeat itself," insists the spin doctor at ONdigital's headquarters in south-west London, when confronted with the striking parallels between the prospects for the venture and the fate of British Satellite Broadcasting (BSB).

BSB employees were sacked on the spot after the merger with Rupert Murdoch's Sky nine years ago to form BSkyB.

What led ONdigital to establish itself in the Marco Polo building, the office block in Battersea that became the glass and marble catafalque for BSB, British television's most ignominious flop, is difficult to understand.

It is hard to imagine a headquarters so haunted by ghostly hubris, nor so likely to put the company constantly on the defensive, if only because it draws attention to so many other points of coincidence with BSB. I can quickly think of 10.

Examined as a whole, these 10 coincidences (you may not agree with all of them - but you have to admit there are lots) suggest that this autumn's debut of digital television has borrowed much of the script from the earlier fight between Rupert Murdoch's Sky and the hapless BSB.

You will remember the final episode, in which Murdoch walked away in control of the merged BSkyB, which quickly became one of the most profitable companies in Europe. Consider:

1. Now, as then, this has been a battle between an officially

franchised ITV-led joint venture (on both occasions including Granada Television, the bedrock of the ITV system) pitted against an entirely entrepreneurial undertaking, using satellites registered in Luxembourg, led by the most formidable media predator of all time, Rupert Murdoch.

2. Murdoch has been forced outside the tent, doing what

comes naturally, rather than admitted inside the official club with the regulator's imprimatur. This, both now and then, has not been a situation of Murdoch's own making. It is one created by the regulators themselves.

More than a decade ago, the Independent Broadcasting Authority refused to allow Murdoch to launch an official direct satellite broadcasting service, and gave the licence instead to the consortium led by Granada.

In the case of digital terrestrial broadcasting, Murdoch had already agreed to be a terrestrial digital partner with Granada and Michael Green's Carlton Television, but the Independent Television Commission (as it now is) threw him out.

In both cases, the regulators have specifically ensured that Murdoch has been freed to operate without constraint.

3. Murdoch has in both cases succeeded in using his singu-

lar control to move faster than his competitor. The advantage has proved decisive. In February 1989, Sky launched first while BSB resorted to taking out television and newspaper commercials promising a June launch (which never materialised).

By launching first, Sky was able to establish a vast lead over BSB. The advantage was consolidated by the tactic of subsidising the supply of hundreds of thousands of dishes. This almost bankrupted Murdoch, but it turned BSB into a space wreck on which pounds 1bn was eventually spent, and when the doors were closed on the company, there were almost no customers left.

4. In 1989, as today, Murdoch aimed to saturate the airwaves

with channels. Then, Sky was offering not only its own channels, but those of many others who were able to take advantage of the capacity of the Astra satellite to carry dozens of channels, versus only five available on the BSB satellite.

Today, BSkyB is preparing to launch a digital satellite service with hundreds of channels, including those of the BBC, compared to just a couple of dozen likely to be available anytime soon by terrestrial digital.

5. Now as then, Murdoch's competitor hired as its chief

executive a marketer without significant television industry experience. In 1989, BSB was led by the affable Anthony Simmons-Gooding, hired from Saatchi & Saatchi, who famously promised shareholders that he would "go for broke" (and delivered).

ONdigital has hired Stephen Grabiner, former chief executive of Express Newspapers and previously marketing chief at The Daily Telegraph.

6. Both Simmons-Gooding and Grabiner are obses-sed with

aerials. Simmons-Gooding bet his store on something called a squarial which he figured would appeal more to

the great middle class than the dustbin lids (as he termed

them) offered by Sky.

Grabiner, almost as if reading from the same script, insists that ONdigital will prosper because viewers will not need a dish, but will often be able to pick up its signals using their existing UHF antennas.

7. The marketing men have come up with remarkably

similar assessments of their potential markets. Simmons-Gooding used to sneer at Sky customers as "downmarket", while Grabiner seems to describe his offering as if it were a quality newspaper.

He insists that ONdigital is not launching to the same people as Sky Digital, but will appeal to people who have resisted pay-TV so far. Murdoch has been constant; he has always approached television as a mass medium.

8. A decade ago, Simmons-Gooding spent millions during

Sky's launch to advertise that something better was on the way. ONdigital plans an autumn advertising campaign, too, before its receivers are in the shops.

Last time, Murdoch responded to BSB with an advert of his own, showing a Sky dish labelled "On Air" with a BSB "squarial" captioned "Hot Air." He may be tempted to repeat the goring.

9. BSB was continually vague about its launch date and

ONdigital is, too. BSB first promised a June 1989 launch, then an "autumn" launch but no date, until finally a handful of receivers became available.

Sky promised a specific launch date and met it. BSkyB is promising (and they are a public company, so it must be assumed truthfully) that it will launch its digital service on 1 October. ONdigital still will not give a launch date, has yet to start trial transmissions or to commission the customer service centre that is vital to pay-TV operations.

10. BSB vainly pleaded with the regulators to save it when it

became apparent that Murdoch was walking away with the prize. Even for ONdigital, a company following closely to the original script, that's not going to fly - not with Elisabeth Murdoch a close pal of Peter Mandelson, and Murdoch himself tight with Tony Blair.

So in a slight variation, last week, ONdigital appealed to the Government to save it by demanding that all current model television sets in use in Britain must be compulsorily scrapped by 2008. Consumers would then have to buy digital sets equipped for its service, whether or not they want it.