Outlook: Battle is joined in digital television
Thursday 06 May 1999
ONdigital is getting in before Sky by offering free set top boxes too, but only to those who buy a new TV. Cable already offers a free box, but the digital release doesn't begin until June and won't be fully national until March next year.
As it happens, cable is Sky's main target here, not ONdigital, but Carlton and Granada's terrestrial platform is badly caught in the cross fire. There is no option but to match Sky's costly promotions blow for blow. Neither of its shareholders are short of a bob or two; whether or not this is predatory pricing by Sky, Carlton and Granada are big boys, both used to and presumably prepared for the rough and tumble of a long business fight. They both have direct experience of Mr Murdoch and know he doesn't take prisoners.
But as the stock market correctly surmised by marking Carlton's shares down so heavily, the fledgling ONdigital is going to find the cost of a prolonged price war more difficult to absorb than Sky, with its existing substantial subscriber base.
Sky is a focused pay TV business with an existing and considerable vested interest in migrating its analogue subscriber base to digital. Carlton and Granada are new to the business, and both have other calls on their time and money. Sky's initiative has to mean the cost of the ONdigital experiment will escalate quite substantially; at this stage we can only guess at by how much.
None of this necessarily means we are faced with a replay of the head to head battle between Sky and British Satellite Broadcasting in the 1980s, which ended with Sky absorbing BSB. ONdigital is still a different enough pay TV offering, in terms of access if not product, for it to be able to coexist with Sky. Even so, breakeven and payback are plainly delayed, possibly by some years.
The bigger threat to Sky was always going to be cable, which after years of shambolic management and marketing, looks finally like getting its act together. Able to offer both TV and broadband telecommunications, its digital offering ought to be superior to Sky's - more, faster and better in interactive functions. Furthermore, to the extent that Sky continues to add conventional subscribers, they tend to come almost wholly through cable. Long term, this cannot be good for Sky, whose present pay TV monopoly depends on a stranglehold on both product and distribution.
So Sky's move looks as much defensive as aggressive. Its digital satellite platform needs to find some way of heading off the threat from cable. Price wars are usually quite damaging to shareholder value, but they are plainly good news for consumers, especially when conducted among three players all determined to stay the course. This is how competition is meant to work. Maybe we should be thanking Mr Murdoch for finally giving us a taste of it in pay TV.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...