Clouds in Murdoch's Sky: William Phillips argues that the promised satellite and cable television revolution has stalled

Not since the early Eighties have we been so deafened by prophetic techno-babble about media and communications. Coming out of the Conservatives' first slump, broadband and multichannel were the buzz words. Exiting the second Tory trough, it's the information superhighway. The promise is the same: films and football, armchair shopping, banking and betting, so much choice that we will spend more time planning what to watch than watching it.

British Telecom and cable television operators are locked in battle about which should have prior rights to dump these goodies in couch potatoes' laps. Above their battle soars the Astra satellite, already blanketing Britain with a score of channels. Half a dozen more will follow by Christmas.

It will cost billions, as revolutions are apt to do, and it is hard to find an existing newspaper owner or broadcaster who has not stuck at least half a finger in the pie. Perhaps this is why certain facts about what happened, or failed to happen, between past and present bursts of electronic euphoria have not received the attention they deserve. For instance:

In 1982 it was widely predicted that by now half the country's homes might receive some non-terrestrial television, by wire or dish. Today's actual figure is one in five.

Modern cable systems pass about 3 million out of 23 million households. Fewer than 700,000 have signed up: penetration has dropped slightly since early 1993. Cable TV's total reach, including old narrowband networks, is lower than in 1990.

In the first 28 weeks of 1994, compared with the same period a year ago, average viewing by non-

terrestrial subscribers has fallen by almost two hours a week, or 7 per cent (see table). This accelerates the fall of 1.2 per cent between 1992 and 1993, although nationally available satellite services increased from 10 to 16 between the first halves of 1993 and 1994.

The dominant satellite television operator, BSkyB, suffered a drop of 18 per cent in average viewing per customer between 1993 and 1994. Some of this can be blamed on the general rise in fees when BSkyB's Multi Channels package ( pounds 20 a month) was introduced. But its free services, Sky One and Sky News, have not been spared.

Viewing of Sky One, the general entertainment service, is down by a remarkable 29 per cent. It has become less popular in satellite and cable homes than Channel 4 or BBC 2, the epitomes of the arrogant cultural elitism once deplored by Rupert Murdoch. Sky News, which was being given the tabloid touch by the Sun's Kelvin MacKenzie - until his sudden resignation yesterday - is down from 1.5 to 1.2 per cent of viewing.

According to the market researcher GfK, hired by satellite's terrestrial rivals in the ITV Association, one in 10 customers of Multi Channels drop out each year. Some move house and do not bother to stick up a new dish; some cannot afford BSkyB any longer; some reconsider costs against benefits. The typical subscriber still passes more than two-thirds of viewing time with the four old networks.

Non-terrestrial television is the medium's most expansive innovation since the original black and white box, and the most intensively sold. Since 1989, Sky (later BSkyB) has held a near-monopoly of the most attractive novelties: recent films and live sports. It enjoyed free publicity worth tens of millions of pounds in newspapers belonging to Rupert Murdoch's News International group. Despite this, in its first five years, satellite has been the slowest-growing species in television's 50-year history.

Mr Murdoch's four-channel Sky Television gobbled up BSB, its only serious competitor, after six months' conflict. This appeared a famous victory for News International - the Luxemburg-based privateer had sunk a licensed UK warship. Arguably, though, the downmarket coloration the merged BSkyB acquired by abandoning all BSB's worthy public service gestures, such as arts programming and investment in feature films, has hampered progress.

The Sun-and-Sky image suited satellite television in the late Eighties when the future appeared to belong to Essex Man, Mrs E and the kids; but once they started to feel the pinch, the lack of programming targeted at childless and/or genteel viewers became a problem.

The upmarket folk avoiding satellite channels include advertising personnel, who see little reason to switch part of their budgets from mainstream television or the burgeoning national commercial radio sector. Mr Murdoch was originally so starry-eyed that he proposed making even the film channels free of charge, confident that advertising would pay for them. Experience has taught him to charge viewers as much as they can bear.

Consider two sums. The BBC colour licence means that typical BSkyB customers' consumption of BBC programmes costs them 6p an hour. Assume pounds 15 of the pounds 20 monthly Multi Channels bill is for BSkyB's three film channels. They watch around 80 films a year, costing 45p an hour - seven or eight times as much as the BBC. The fact that film channels stuffed with recent releases command only one-tenth of subscribers' viewing time should give pause to anyone who thinks piping Hollywood down wires guarantees a pot of gold.

Like most assumptions about the British home entertainment market, this one has been carried over wholesale from film-mad America. So has faith in sports, for which ever-spiralling sums are being bid by all broadcasters. However, sports ratings have been in general decline on terrestrial television for 15-20 years.

If rights to Test cricket, for which BSkyB is pitching today, eventually head heavenwards to Astra, it will be partly because the mass public is no longer as interested in sporting spectacles as in the industrial-era heyday of passive, regimented leisure.

We can see how the constant piling-on of more specialised, narrowcast options fails to stimulate usage. UK Living, aiming to be the housewives' daytime choice, currently reaches fewer than one in 20 housewives in cable and satellite homes on any given day. Country Music Television is on a 0.2 per cent share. Narrowcasting collides with the law of diminishing returns.

Not long ago publishers thought newspapers were an incurable addiction. Now they slash their cover prices and cut each others' throats. Mr Murdoch is said to have started the press's price war believing that only four dailies have the strength and diversity of appeal to flourish in the next century. And perhaps only four big, universally appealing television channels?

HOW SATELLITE/CABLE VIEWERS DIVIDE THEIR TIME

----------------------------------------------------------------- Percentage viewing shares ----------------------------------------------------------------- 1994* 1993* 1992* BBC1 24.2 24.4 25.1 BBC2 6.4 7.0 7.1 ITV 30.3 30.9 30.2 Ch 4 7.0 7.6 6.4 Total terrestrial 67.9 69.9 68.8 Sky One 5.6 7.4 7.5 Sky News 1.2 1.5 1.8 Sky Sports 3.7 3.3 3.4 Movie Channel 3.4 3.2 3.6 Sky Movies Plus 3.9 5.0 6.2 Sky Movies Gold 0.6 0.5 0.4 Total BSkyB 18.4 20.8 23.0 Other channels 12.8 9.3 8.2 Total non-terrestrial 32.1 30.1 31.2 Total weekly viewing** 25.47 27.38 27.73 ----------------------------------------------------------------- *Data for first 28 weeks each year ----------------------------------------------------------------- **per subscriber (hours) Source: BARB -----------------------------------------------------------------

(Photograph omitted)

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