BSkyB To Reach Almost 9m Subs By 2008, Say Forecasts

The forecasts show that whilst cable’s growth is virtually flat and BSkyB’s begins to level off, the free digital terrestrial (DTT) service, Freeview, will continue to make significant inroads. The broker expects the number of Freeview users to jump from this year’s 2.2 million to around 5.9 million by 2008.

At Sky, subscribers are predicted to rise from 7.1 million this year to 8.7 million by 2008, leaving it still comfortably at the top of the UK’s multichannel TV market. Cable growth will remain pretty stagnant, up to 3.8 million in 2008 from 3.3 million currently.

UK Pay TV Market Forecasts
	2003	2004	2005	2006	2007	2008
BSkyB / DTH	7,145	7,600	7,987	8,281	8,509	8,702
Penetration (%)	28.8	30.5	31.8	32.9	33.6	34.2
Cable	3,260	3,291	3,388	3,521	3,659	3,803
Penetration (%)	13.1	13.2	13.5	14.0	14.4	14.9
Freeview / DTT	2,200	2,950	3,700	4,450	5,150	5,850
Penetration (%)	8.9	11.8	14.8	17.7	20.3	23.0
UK TV homes	24,833	24,957	25,082	25,208	25,334	25,460
Source: Merrill Lynch, November 2003

Merrill Lynch says that competition for BSkyB is pretty scarce (at the moment), with cable operators undergoing financial restructuring and Freeview running as a free-to-air model.

“Sky’s strategic positioning and innovation within the evolving UK digital landscape allows steady growth combined with scale economies, high financial and technological investment. These plus exclusive content make barriers to entry formidable in our view,” it says.

This is in contrast to the situation in 1999, when Sky was facing much more aggressive growth from the cable companies NTL and Telewest. These cable operators were adding customers at a much faster rate than Sky between 1997 and 1999.