BSkyB’s Lead In UK Pay-TV Market Extends – Merrill Lynch Long-Term Forecasts
The failure of ITV Digital has had dramatic effects on the likelihood of hitting Government’s target of 95% penetration of digital television (DTT) by 2010, with penetration now only expected to reach 59.3% by that time, according to new forecasts from Merrill Lynch.
Digital television has faced a number of setbacks, from ITV Digital’s failure through to poor signal reception in some areas and a lukewarm reception by a significant proportion of the public (see Insight Analysis: Digital Struggles).
| UK Digital Television Penetration Forecasts | ||||||||||||||
| 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |
| New forecasts (July 2002) | 24.7 | 25.9 | 32.3 | 38.9 | 42.4 | 41.1 | 44.0 | 47.6 | 50.6 | 53.2 | 55.3 | 57.2 | 58.3 | 59.3 |
| Previous forecasts (January 2002) | 24.7 | 25.9 | 31.7 | 38.9 | 42.8 | 48.0 | 52.4 | 56.4 | 60.3 | 63.7 | 66.8 | 69.7 | 71.7 | 73.8 |
| Source: Merrill Lynch, July 2002 | ||||||||||||||
BSkyB ever more dominant The previous forecasts predicted that the number of cable TV homes would catch up with BSkyB, at around 7.5 million each, in 2010. However, the forecasts for cable growth have been substantially reigned in, reflecting BSkyB’s now dominant position in the pay-TV market.
The two main cable operators in the UK – NTL and Telewest Communications – are both heavily indebted. NTL is currently awaiting bank approval for a restructure which will help write off its debt (see NTL Rescue Plans Revealed); this is likely to be granted. In all probability, Telewest will head down a similar path imminently if it is to survive its current debt burden (see Telewest Agrees To Discuss Refinancing).
Since the demise of ITV Digital, Sky’s competition is fragmented and heavily weakened, says Merrill Lynch. Accordingly, Sky looks set to lead the way, as shown.
Growth rates An alternative analysis of the forecasts is to look at the growth rates of the main television platforms. The charts here show that there is a peak in cable growth in 2004, when NTL and Telewest are likely to have emerged from their restructures and got back on track. From that point on, cable is predicted to show a faster growth rate than BSkyB, although growth for all platforms begins to slow from around 2005.
The complete data from which these charts were drawn can be found UK Cable, Satellite & DTT Penetration Forecasts From Merrill Lynch – July 2002.