Mathew Horsman on the media
Tuesday 27 February 1996
Contrary to what you might read, the choice was not between PPV or ordinary broadcast. Don King, the US boxing promoter with the Bride of Frankenstein hair, insisted that the event be available on pay-per-view only, on the assumption that he could generate as much out of the event here in the UK as he would in the US, where PPV is an established technology. If he hadn't reached a deal with Sky, he would have insisted the event be available only in cinemas and clubs, and at much, much more than a tenner.
Of course, Sky is far from altruistic; nothing Murdoch does could ever be so characterised. Sky went along for its own reasons. First, it wants to test-market the PPV concept in the UK, where no one knows whether there really is an appetite. Until now, we have experimented with limited terrestrial television (only four channels, with one, Channel 5, on its way) and subscription TV (satellite and cable). There isn't a broadcaster in the land who isn't interested in finding out whether the British public will actually pay for "event" television. They will all be watching the Sky experiment very closely.
Once digital television is introduced, there will be wall-to-wall TV channels, and at least some of them will be driven by PPV programming. Everyone, and that includes the BBC and ITV, will be offering programmes this way.
Sky wants to be first, and has the technology in place to do so. Not only does it have channel capacity but it has the country's most sophisticated subscription management system, allowing punters to dial an automated telephone service, order a PPV film or sport event, and await the bill. Sky's subscription service centre then updates the "smart card" inserted in set-top boxes around the country, allowing the signal to be received unscrambled by the TV set.
Sky has also been accused of "making people pay twice". According to this common argument, subscribers to Sky Sports have already stumped up for the right to watch subscription sports, and shouldn't have to pay again. There is some merit to this. The event will be going out live at 4am, on Sky Sports2, one of three satellite sports channels. At that time of day, there are no broadcasts whatsoever. So Sky is merely asking subscribers whether they want to pay extra at a time when there is nothing else on.
But the event will also be repeated three times the following day, pre- empting programming that normally would be going on at that time. Only those who pay the additional pounds 9.95 will receive an unscrambled signal at those repeat times.
Such pre-emptions will not be a problem once new digital capacity is brought on. With scores of new channels to choose from, broadcasters will be able to run films continuously all day, allowing PPV customers to choose their preferred movie and starting time. Sky promises that we will never be more than 15 minutes away from the opening credits of our chosen film.
Sky's experiments should tell us a lot about PPV in Britain. How many viewers will sign up? (US experience suggests about 8 per cent of those who can actually order such PPV events) Is sport the only kind of programming we are willing to pay more for? Can PPV pave the way for the truly revolutionary delivery system, on-demand video? (That's the system, up and running nowhere in the world, where customers can order the film they want from a vast digital library and watch it when they want.)
I, for one, am excited about all this, and don't much care if it is Sky or the BBC or ITV that ushers in the PPV world first.
As ever, however, there is a serious problem with Murdoch and his hold on television. The issue is not sports, or "crown jewels," or whether the Bruno-Tyson match will be available at home or at the cinema. It is not whether the event is broadcast on Sky Sports2 and at what time. It is not whether it costs pounds 9.95 or pounds 129.95. The issue is monopoly.
Sky has secured the rights to Hollywood films and major sporting events. It controls the only functioning encryption technology in the UK, used to scramble and unscramble broadcast signals. It dictates the terms on which its many channels are offered to the cable industry. And it can put its prices up, year after year, just as any monopolist can.
What we need is a competitive environment where several broadcasters bid for programming, where each has access to common broadcasting platforms and where all are able to offer their products to viewers. Sky's monopoly position in pay-TV gets in the way of the market.
The answer is not to pass restrictive bills protecting certain sporting events from the clutches of pay broadcasters, but rather to ensure that all broadcasters have an opportunity to bid openly and fairly for rights. That can't happen when there is a near-monopoly. Just as the Government has moved to encourage competition against British Telecom, in order to break the telephone monopoly, so there ought to be action to curb Sky's dominance in the pay-TV market.
Ask any broadcaster privately what he or she really thinks of Sky's PPV experiments, and you'll hear the obvious answer. They are as interested as Murdoch in how well the system will work in the UK.
Of course, they do not like Sky's dominance, and will no doubt make their views known to the Office of Fair Trading, which is investigating the pay-TV market. But they will pore over the viewing figures from next month's boxing match. Every broadcaster in Britain would love a part of the PPV purse.
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