Leading Article: Commercial triumph, regulatory nightmare

LAST week British Sky Broadcasting, the satellite television network, confirmed that it plans to go public, selling some 20 per cent of its shares on the New York and London markets. This offer is expected to value the business at some pounds 5bn, making it worth substantially more than the whole of the ITV network put together. BSkyB has probably already a larger operating profit than the ITV companies, and even if satellite penetration increases only gradually from now on, the gap is likely to widen.

The sheer scale of this commercial success should have a sobering effect both on the sceptics (including many industry insiders) who believed that the adventure was doomed, and on anyone concerned with the regulation of British television. BSkyB has demonstrated that British viewers are prepared to pay monthly subscriptions to watch its programmes, even when they can watch regular television for the price of the licence fee.

All the arguments why satellite TV would fail - that there would be no demand for additional channels, that programmes would be underfunded and of poor quality, that it would have to charge too high fees to make the operation pay - have been confounded by the harsh test of the marketplace. No one is forcing people to pay for BSkyB; they do so because they want to.

It would be wrong not to acknowledge this success and the commercial courage of the two groups of owners - in particular News Corporation, which founded Sky and owns 50 per cent of the present group, but also the founders of Sky's rival, British Satellite Broadcasting. They took an enormous commercial risk, one that brought News Corporation to the brink of bankruptcy but ultimately paid off.

But if BSkyB is a commercial triumph, it is also a regulatory nightmare. Terrestrial television is closely regulated, both in its ownership and its programming. Satellite TV is wholly unregulated. In a rational world it would be absurd that the relatively small ITV companies should be limited as to the number of franchises they operate, and newspaper groups be barred from controlling these companies, while the much larger satellite service can offer a national service and effectively be controlled by a single newspaper group. Similarly, it is odd that ITV companies should have to pass quality thresholds determined by a panel of individuals, and that the BBC's output should also be closely monitored, while the output of BSkyB is determined almost entirely by market demand and the good sense of its owners.