New head of BSkyB will target Gates

THE BATTLE for dominance of digital television took a fresh turn yesterday with the appointment of Tony Ball as Rupert Murdoch's general in the field. The new chief executive of BSkyB has, according to industry executives, a daunting task: to pit Mr Murdoch's money against the vast resources of the richest man in the world, Bill Gates.

Mr Ball is British, but has spent the past few years running a cluster of Mr Murdoch's Fox pay-TV channels in the US, taking Fox Sports to 68 million homes coast-to-coast. He is, say colleagues, a major-league Murdoch player, responsible for his boss's most ambitious project yet.

BSkyB said last week it would spend more than $300m (pounds 187m) in promoting satellite digital, handing out free set-top boxes and cut-price telephony. No sooner were the plans revealed than the battle for digital spread beyond measure - the next day Mr Gates's Microsoft took a large stake in the British cable television market, buying 30 per cent of cable operator Telewest.

Mr Gates is worth nearly $100bn (pounds 62.5bn) and has, at a stroke, deepened the pockets of the cable industry and raised its profile as the main competitor to BSkyB. Last Thursday Mr Ball's predecessor, Mark Booth, described the third competitor, the terrestrial operator ONdigital, as a "niche player". By Saturday, with the Microsoft entry into the cable market, most of the rest of the industry was in agreement.

Mr Murdoch's armoury is impressive. BSkyB already dominates the pay-channel market for digital with more than 50 sports and movie channels. That means the Murdoch empire stands to get huge incomes from its cable rivals as well as its own satellite outlet.

BSkyB also has the advantage of being quickest off the mark in the race, with Sky- Digital on course to beat its target of one million subscribers by October.

The cable business, by contrast, is seen as a slumbering giant. Its digital services have not yet been rolled out, and cable companies are in the midst of a consolidation process. Two of the main players, Cable & Wireless and Telewest, are in merger talks, and analysts expect the third, the American firm NTL, eventually to merge with the others.

Bill Gates's intervention, though, is seen as testimony that when cable goes head-to-head with Sky later this year, or early next, it has the power to give Sky a beating.

Most importantly, cable can deliver television "interactivity" which is hugely faster than anything current satellite services can offer. The technology is superior and, according to some business analysts, the Gates move underlines that "big satellites have a sell-by date, the future is cable".

Microsoft is seen as needing to take an important step forward from being a PC company, and is developing software for interactivity in the digital television market.

In 1997 Mr Gates alerted the business world to Microsoft's interest in cable with a $1bn (pounds 625m) investment in the US cable giant Comcast. Now Microsoft has spread itself beyond American shores to take on Mr Murdoch globally.

Satellite v Cable

SATELLITE

THE PLAYERS: BSkyB

OWNERSHIP: 40% owned by Rupert Murdoch's News International. Pathe and Pearson have minority stakes

START: 1 October 1998

INVESTMENT IN DIGITAL:

Initial pounds 315m for free set-top boxes and cheap telephony. Overall investment much higher

SUBSCRIBERS: 551,000 with 1m target by October

CHANNELS: Short-term goal of 200

CABLE

THE PLAYERS: Telewest, Cable & Wireless, NTL

OWNERSHIP: Bill Gates's Microsoft has 30% of Telewest and 5% of NTL

START: Later this year, starting with Cable & Wireless on 1 July

INVESTMENT IN DIGITAL:

Between them they have debts of pounds 8bn, laying cable

SUBSCRIBERS: 3m to analogue services

CHANNELS: Short-term goal of 200