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British Satellite Broadcasting: the full responsibility

click on picture for a full size PDF version of the advertisement
[Source: Terra Media Archives, from Variety 7-13 December 1988]
Click on the picture for a full size PDF version

This remarkable full-page advertisement stands as a testament to failure of policy and foresight in the face of pragmatism and competition. It appeared in the American film trade paper Variety eight months before the planned launch of the Marcopolo satellites and nine months before the British Satellite Broadcasting (BSB) service was due to begin. There can be no doubt, given the heading and the picture of Mrs Thatcher and what could be called her filing Cabinet, that the government wished to be associated with and even take credit for the BSB project.
        In fact, the text of the advert shows how much policy-making was going adrift at the time. 'By September 1990,' it said, 'the British Government's plans for the future of British Broadcasting will become law. And when they do, a lot of people here in Hollywood will feel the effect. The plans are outlined in a document published last month. In a masterpiece of British descriptive understatement, the document is known as a 'White Paper'. ... As you probably already know, BSB will provide the first British alternative to the BBC and Independent Commercial Television. ... 
        'But the new White Paper proposes still more competition for commercial television, and opens the way for the early use of the two extra channels from BSB's satellites. There will be  new methods of funding for the BBC. (Including subscription which is being pioneered nationally in Britain by BSB.). The ITV network will be broken up. The minority fifth channel, with limited coverage, will be launched, but not until 1993. If all this comes as a bit of a shock to Hollywood, we hope it comes as very welcome business. ... So, although, eventually, there will be a lot of competitors following us to The West Coast, we see no fault in that. Competition, after all, is the reason we're here.'
        No mention of a rival four-channel service which had been announced by Rupert Murdoch's Sky Television the previous June for inception on 5 February 1989, using the new Astra satellite that was launched the very week this advert appeared.

It was good news indeed for Hollywood: competition for film rights pushed prices up dramatically, with Murdoch personally blazing a trail among other studio heads for rights deals. (Murdoch had bought Twentieth Century-Fox for $675m in two halves in March and September 1985.) 
        Whilst Sky's decision to put movies on an advertising-supported channel did not find much favour in Hollywood, the decision to go for the simple solution of broadcasting in PAL, requiring viewers to acquire only a dish and set-top box, proved more effective than BSB's choice of a square antenna (the 'squarial' in the centre of the text in the advert)—which it had difficulty sourcing—and the government-imposed MAC transmission system, which required the public to invest in new television receivers.
        BSB launched for cable customers on 25 March 1990 and via satellite on 29 April 1990. But it made insufficient headway and could not avoid losing heavily.
        Murdoch was also losing money—the News Corporation accounts for the year to August 1990 showed that Sky made a loss of £95m in the 10 months that it was regarded as fully operational. Murdoch wrote off £121m of investment costs, which reduced the group's international profit from £211.3m to £120.1m. The British part of the operation saw its losses zoom up from £55m to £257m. Only the Movie Channel was making inroads, with around 750,000 subscribers.

The final curtain
On Monday 29 October 1990, Rupert Murdoch went to see prime minister Margaret Thatcher at 10 Downing Street and mentioned at the end of their conversation that a merger of Sky and BSB would be needed as both were losing money. No reference was made to the regulatory body, the Independent Broadcasting Authority (IBA), which was about to be replaced by the Independent Television Commission (ITC). IBA officials were furious, rightly, that the management of BSB had allowed Sky to take over a publicly owned franchise that endowed a five-channel monopoly in direct broadcasting by satellite (DBS) on its holder.
        On 2 November 1990 BSB merged with Sky Television to become British Sky Broadcasting (BSkyB). The merger slipped through in the few days before the ITC took over. The broadcasting policies Thatcher had pursued (see above) were largely unimplemented. Cable, meanwhile, had suffered from the uncertainties caused by DBS competition and by adverse changes the government made in tax allowances for capital investment.
        There was no doubt, however, about the winner in the competition that BSB had proclaimed as its raison d'être. The brand name is Sky. The squarial was abandoned, MAC encoding was abandoned, the public service remit of DBS was abandoned. And by a twist of irony, in that same month, November 1990, Margaret Thatcher was turned out of office by her political colleagues.

Of the other claims and promises: far from being broken up, the regional companies that formed the ITV network were allowed to merge and 'minority' Channel Five did not launch until March 1997.

Bibliography: A lively account of the introduction of satellite broadcasting in the UK is given in Peter Chippendale and Suzanne Franks: Dished! The rise and fall of British Satellite Broadcasting (Simon & Schuster, 1991)

Quotation by David Mellor, a member of the Thatcher government
laws Official British media reports: Direct satellite broadcasting.
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Page updated 15 August 2008