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Rich prince from the sky finds Cinderella.

Everyone laughed at it, although hardly anyone had seen it. It has lost several millions of dollars since its birth in the late 1980s.

But. according to media analysts, it is destined to be Britain's fifth national network. In the country that claims to have invented television more than 50 years ago. but where only four channels, generating nearly 4 billion pounds of revenue between them. dominate the nation's 20 million TVHH, being "number five" is no mean feat.

The subject in question is BSkyB, the U.K.'s satellite TV network. "With the number of satellite dishes growing and the development of cable TV. BSkyB is going to be big," said Guy Lamming, media analyst at James Capel. "The introduction of digital channels in Europe in 1995 means we can expect 50 channels from BSkyB alone. It will definitely be a major service by the end of the decade," added Dermot Nolan of Coopers Ed Lybrand. "It's a question of time because of the rate at which satellite dishes and cable networks will be installed. But in about 10 years' time, BSkyB will be the fifth network," declared Andrew Hunter of Hoare Govett.

BSkyB's foundations lie in Sky Television, a satellite network launched by Rupert Murdoch through his News Corporation in the 1980s.

Sky TV devoured rival BSB in 1990 to form BSkyB. Fifty per cent owned by News Corporation, BSkyB now comprises six channels: Sky One, a general entertainment service; Sky News, plus four encrypted and subscription-supported sport and movie services. Satellite dish owners could also pick up other BSkyB services, such as The Children's Channel, for free.

BSkyB began to flex some muscles by snatching away from more established rivals a lucrative soccer contract valued at more than 1,300 million. Then, last December, it poached David Elsrein to be head of programs. Bringing in Elsrein, who had helped turn London-based Thames Television into one of the most exciting ITV broadcasters. was a definite scoop.

So what is happening to make satellite TV a serious contender in U.K. broadcasting? According to industry observers, cable and satellite are expected to penetrate nearly 10 million TVHH by the year 2000. Satellite alone should account for 7 per cent of all viewing, compared with the current 4.2 per cent. In addition, in all TV homes receiving satellite TV, 40 per cent of viewers will choose satellite programs. BSkyB reported its first operating profit in the year ending June compared with a 13.3 million pounds loss last year. News Corporation's share of the profit amounted to 6.7 million pounds and analysts foresee total profits jumping to 68 million pounds next year. And this despite Sky News' 20 million pounds annual loss.

The network is constantly attacked for relying on non-U.K. products for 90 per cent of its programs. But Elsrein announced at this year's Edinburgh International TV Festival that BSkyB is to invest 6 million pounds in UK. movie productions. It is also to commission its first original mini series Red Eagle, an international co-production. Elstein eventually wants at least 20 percent of all BSkyB programs to be original U.K. product.

Sky News, which is now seeking equity partners, has expansion plans for Europe, the U.S. and Africa.

An illustration of the satellite network's growing clout was the September launch of Sky Multi-Channels (SMC), an ambitious pay-TV venture. Operated by BSkyB, SMC is a basic-tier package of 18 satellite channels, including U.K. gold, a BBC/Thames TV channel; Discovery; The Family Channel; and OVC, a new shopping channel. Next year, VH-1, MTV's sister music channel and Nick At Nite, will be added. Murdoch also plans to launch a second sports channel in the U.K..

But critics are already spitting poison. The established terrestrial networks, ITV and Channel 4, fear that BSkyB will take away advertising revenue. They are demanding tougher regulations for BSkyB, which currently operates by the more lenient cable and satellite TV rules. Michael Grade of Channel 4 recently denounced Sky for showing "an endless succession of violent and sexually explicit films" to boost ratings.

Elsrein insisted: "We are not a threat to ITV or Channel 4. Cable and satellite are expected to control 5 per cent of the [total] advertising revenue. He attributes his attackers' fears to snobbishness. "We must be prepared to face it. Satellite TV is here to stay."
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Title Annotation:British Sky Broadcasting PLC
Publication:Video Age International
Date:Oct 1, 1993
Previous Article:Attacks from German TV, not scaring ORF.
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