Sky Television plc

Sky Television plc was a public limited company which operated a nine-channel satellite television service, launched by Rupert Murdoch's News International on 5 February 1989. Sky Television and its rival British Satellite Broadcasting suffered large financial losses and merged on 2 November 1990 to form British Sky Broadcasting (BSkyB). Programming merger took effect on 1 December 1990.

History

Sky Television plc was originally Satellite Television Ltd. (SATV), a consortium set up by Brian Haynes in November 1980.^[1][2] Haynes was a former journalist employed at Thames Television. In 1979 he produced a documentary for the TV Eye strand which looked at Ted Turner and his satellite broadcasting operations in the USA from 1970 through the Turner Broadcasting System (now a media conglomerate and subsidiary of Time Warner, subject to acquisition by AT&T).^[3][4][5] He soon realised the potential of using satellites to provide a new kind of television broadcasting. Haynes first advised Thames Television, the Independent Broadcasting Authority and an industry group before setting up SATV.

In October 1981, SATV began test transmissions on the Orbital Test Satellite after the European Space Agency allowed the company to test the satellite for the use of commercial television, with an hour of light entertainment in English each night. While at first the island of Malta was its official target, it had a wide, pan-European footprint. However, the low-powered satellite forced it to broadcast to cable systems rather than directly to individual satellite dishes, which proved to be a losing proposition.

European satellite television plans started in the late 1960s, when plans were first laid for an experimental satellite. The Orbital Test Satellite was launched using the Delta rocket (then manufactured by McDonnell Douglas, now Boeing) in May 1978 and allowed the necessary testing to allow for Europe's first commercial venture in telecommunications and television. From 1978 to 1981, OTS was successful in illustrating the viability of Ku-Band technology for the continent of Europe. Following the completion of its test programme, excess transponder capacity was leased to SATV.^[6] While governments in Britain and other European countries wrestled with the allocation of their channels, Satellite Television played a pioneering role, providing Europe's first satellite-delivered cable TV service.

Satellite Television/Super Station Europe

Satellite Television (also known as Super Station Europe on screen) began regular transmissions on 26 April 1982,^[7][8] becoming Europe's first ever cable and satellite channel, originally broadcasting from OTS aimed to cable operators all over Europe. Norway and Finland were the first two countries to permit the new service's transmission via cable, followed by Malta and Switzerland, and then West Germany.^[9] Originally it did not have a UK broadcasting licence and consequently was in a similar legal situation to the pirate radio stations of the 1960s and 1970s; however, reception of the OTS satellite in the UK required a satellite dish approximately 10 feet wide, and it was believed that there were fewer than 50 privately owned installations in the UK that would permit direct-to-home (DTH) reception of the service.

Many programmes from the ITV companies' archives appeared on the schedules of the new channel, such as Please, Sir!, Dickens of London, The Rag Trade, Within These Walls and Hadleigh. In time, these were accompanied by some self-made programmes, such as the music show Cable Countdown hosted by BBC Radio 1 DJ Mike Read. Initially, the channel's self-made programming and continuity played out from the Molinare studios at Fouberts Place in the West End of London.

By March 1983, plans were afoot to start broadcasting to the UK, with the aim of proving that there was a potential audience with the service being technically possible, and that the service could make a profit.^[10] Nonetheless, the station struggled financially because of a limited audience. This was due to the relatively weak signal of OTS that made direct-to-home reception of the service extremely difficult; the service therefore had to rely on cable audiences, and was restricted to countries where receiving the channel via cable was legal. The service also had to cover the high costs of satellite transmission. By the end of March, Rupert Murdoch had shown interest in the project, and he held talks with SATV's owners about buying a substantial equity stake in the company.^[11] On 27 June 1983, the shareholders of Satellite Television agreed a £5 million offer to give News International 65% of the company.^[12][13]

Murdoch described cable and satellite television as being "the most important single advance since Caxton invented the printing press" and saw it as a way to fulfil his long-held ambition of breaking into the UK television industry. Eventually, Murdoch bought the remaining shares of the company, taking full control.^[14] During August, Murdoch outlined plans which saw the broadcasting hours extended to 17.50 to 22.30 each day, with a mix of music, sport, news, comedy and films. Plans were also afoot to start broadcasting from the new European communications satellite ECS-1 and additional cable operators, allowing it to increase its audience across Europe and gain access to British viewers.^[15] By 16 October 1983, the station finally started broadcasting to the UK.^[16]

Sky Channel

On 16 January 1984 the channel was renamed Sky Channel. Rupert Murdoch and Jardin Owens put in new management, extended its broadcast hours and expanded its programming line-up to incorporate a mix of English-language sports and entertainment shows,^[17] These included new music programmes with Gary Davies, Linda de Mol, Pat Sharp, David "Kid" Jensen and Anthea Turner, such as Euro Top 40, and UK Top 50 Chart. The new management also adopted a more aggressive policy to reach an increasing number of cable households throughout Europe. Shortly after the channel's relaunch, the first cable system in the UK to incorporate it on a permanent basis was Swindon Cable. In the Republic of Ireland, Sky Channel started to become widely available among cable systems in around 1987.

Despite the programming changes resulting in increased viewership across Europe (from 291,470 in December 1983 to 4,003,000 in June 1985, before reaching 9,001,905 by April 1987), Sky Channel was still considered to be under-performing, generating under $20 million per year in advertising revenues. By the mid-1980s, Murdoch was looking to use the newly emerging direct satellite broadcasting technology, and to focus primarily on the British market. Rather than paying for the rights to beam Sky's single-channel signal to cable providers, which in turn supplied the channel's programming to subscribers, direct satellite broadcasts presented the opportunity of providing multichannel programming directly to subscribers' homes via small satellite dish and decoder packages. In 1984, Sky began negotiations with TDF of France, with a view to using the company's planned high-powered satellites for direct-to-home broadcasting. However, nothing came of those negotiations.

In Britain (where cable television had not yet developed as much as in Central and Northern Europe), market research gave Sky a 13% audience share in cable homes, surpassing both BBC2 and Channel 4 in those homes. Its children's programming (then the channel's most successful field) increased to a share of 22.4%, similar to the figures for Children's BBC and Children's ITV. Some of Sky's special programmes, mainly WWF wrestling specials, managed to surpass both BBC1 and ITV among cable audiences.

For the entirety of its early life, the channel continued to be a loss-making enterprise, losing £10 million in 1987. However, in contrast to the station's founders, Murdoch had sufficient financial resources to sustain the operation. The other main English-language pan-European cable and satellite television channel of this period, Super Channel, launched in early 1987 by the majority of the ITV companies, also lost a large amount of money.

Launch of the Sky Network

Murdoch bid for the satellite broadcasting license in 1986 but lost out to BSB who announced plans to begin broadcasting in mid-1989 with three channels on satellite frequencies legally allotted to the UK by international agreement. Murdoch attempted to join the BSB consortium, but was rejected which spurred him on to set up his own satellite service.

Vowing revenge, on 8 June 1988, Murdoch announced at a press conference his plans to expand Sky's service to four channels, thus creating the Sky Television network, ^[18] Sky Channel alongside the other three channels would move to the Astra satellite system (intended for direct-to-home reception), and the new network would centre its operations more specifically to the UK. Murdoch intends to have Sky Television overshadow BSB by having Société Européenne des Satellites launch their own RCA Astro-built satellite, Astra 1A (Sky had from its initial satellite moved to the ECS-F1 (Eutelsat I-F4) satellite).

By renting space on the Luxembourg-based Astra satellites, Murdoch circumvented British ownership laws, and using the existing PAL broadcast technology, Sky TV began broadcasting four channels of programming on 5 February 1989, including an upgraded version of the original Sky Channel, later renamed Sky One; Eurosport, a joint-venture between the European Broadcast Union and News International; Sky Movies, a fee-based all-film channel; and Sky News, a 24-hour news channel. Start-up costs reached £122 million; losses for its first year of operations were £95 million. Initially, Sky Channel's programming remained much the same (children's programmes, soaps, and US action series), except for a number of new game shows and a few international travel documentaries. Another programme that also came with the relaunch was Sky By Day, Sky TV's variation on ITV's more popular This Morning, hosted by ex-Radio One DJ Tony Blackburn (who had moved to commercial radio by then) and ex-Magpie presenter Jenny Hanley. The show had a mix of entertainment, gossip, fashion, etc. Yet it was noticeably low budget and had a small fan base. Prime-time broadcasts to European cable operators of Sky Channel were replaced by Eurosport, which was the only of Sky's new channels to be officially aimed at a pan-European audience (like Sky Channel had up to then).

During May 1989 Sky prepared to give away set topboxes and dishes to new customers in bid to increase customers, but was not helped when its joint venture with Disney collapsed at the same time. The discussion about the venture had been taking place since November 1988, but Disney felt it was no longer on equal footing on "decision-making responsibility" in 50-50 partnership. Disney was supposed to start up two channels, but when the talks broke down, Sky issued a lawsuit against Disney, claiming £1.5 billion in damages.^[19][20] The suit was later settled with Disney selling its stake in the joint venture back to Sky, and agreeing to license its movie library for a five-year period.^[21]

BSB competition and merger

The impetus for the relaunch as Sky Television was the refusal of the IBA to allow Murdoch to bid for the UK Satellite TV licence won by the British Satellite Broadcasting alliance. This created a battle to win customers in this new multichannel environment. In the end Sky's earlier launch and leasing of transponders on the Astra satellite network allowed it to merge with its rival. In contrast to Sky; BSB suffered from the regulatory burdens of only 5 TV channels, building and launching its own satellites and more ambitious and expensive technology. Also it had higher capital expenditure overall, such as the construction of its Marco Polo House HQ in London compared to Sky's industrial estate in Isleworth although this was not a decisive factor.

In 1990 both companies were beginning to struggle with the burden of massive losses and in November 1990 there was a 50:50 financial merger, with a management takeover by Sky. The new company was called British Sky Broadcasting (BSkyB) but marketed as Sky, Marco Polo House was sold, BSB's channels were largely scrapped in favour of Sky's and the Marcopolo satellites were run down and eventually sold in favour of the Astra system (Marcopolo I in December 1993 to NSAB of Sweden and Marcopolo II in July 1992 to Telenor of Norway, leaving the Squarial obsolete. Both companies had already one HS376 in orbit at the time). The merger may have saved Sky financially; Sky had very few major advertisers to begin with. Acquiring BSB's healthier advertising contracts apparently solved the company's problems.

Financial turnaround

The early years of the merged BSkyB saw a haemorrhage of cash from News Corporation funds. At this stage of the company's life it was losing millions of pounds a week. To help turn around the financial fortunes of the company, New Zealand television executive Sam Chisholm was brought on board to manage the day-to-day operations and build the subscriber base, and the company moved into profit.

Timeline

• 1980 – Satellite Television is set up by Brian Haynes, back by backed by Guinness Mahon and Barclays Merchant Bank.
• 1982 – Super Station Europe (SSE) launched
• 1983 – Murdoch's News International takes control of Satellite Television UK (SATV)
• 1984 – Renamed Sky Channel
• 1986 – Granada, Anglia, Pearson, Virgin and Amstrad form British Satellite Broadcasting (BSB) and win Independent Broadcasting Authority UK satellite franchise
• 1987 – BSB awarded licence from the IBA and complete over £200m funding with additional shareholders Reed, Chargeurs, London Merchant Securities and others
• 1988 – July – Murdoch announces his intention to relaunch Sky Channel as Sky Television on the Astra satellite system
• 1989 – 5 February – Four channel Sky Television package launched
• 1990 – March – BSB begins broadcasts
• 1990 – November – Both companies had suffered heavy losses and a 50:50 financial merger was agreed to form British Sky Broadcasting
• 1990 – BSkyB announces former BSB customers will receive Sky equipment (for Astra system) free of charge, Marcopolo satellite transmissions to cease
• 1992 – July – BSB satellite Marcopolo II sold to Telenor
• 1993 – December – BSB satellite Marcopolo I sold to NSAB

Further reading

• "From Satellite to Single Market": New Communication Technology and European. Author: Richard Collins Publication Date: 24 Sep 1998 | ISBN 041517970X | ISBN 978-0415179706
• "High Above: The untold story of Astra, Europe's leading satellite company " Author: Chris Forrester ISBN 978-3642120084
• "Satellite television in Western Europe" Volume 1 of Acamedia research monographs, Author: Richard Collins ISBN 0861963881, 9780861963881

References