ITV And Sky Battle It Out
During the meeting at the House Of Commons last night between broadcasters and a collective of MPs to discuss digital TV and its universality (see Newsline), BSkyB accused ITV of throwing money away by refusing to make its channels available on its digital satellite service. Present were Richard Eyre, chief executive at ITV, and Kate Stross, the network’s finance and development director. Sky sent along Ian West, managing director of Sky Entertainment, and MPs from each of the main parties were also in attendance.
Sky claimed that ITV stood to make £300 million over 10 years by joining the digital satellite platform, even after taking into account the cost of joining the platform.
Ian West, managing director of Sky Entertainment commented: “ITV are throwing money down the drain by not coming on to digital satellite. They are behaving in this economically irrational way simply because the two largest ITV companies, Carlton and Granada, own the pay TV operator on the digital terrestrial platform [ONdigital]. Viewers, shareholders and ITV companies are all being made to pay a very heavy price.”
Richard Eyre, representing ITV, contested the figure given by Sky. He added that,for technical reasons, it would be far more complex and expensive for ITV to transmit all 29 of its different regional outputs by digital satellite than by digital terrestrial. Digital satellite, would, therefore, put ITV under strong commercial pressure to neglect its regional programmes, and that would go directly against the 1996 Broadcasting Act.
Sky also claimed that 9% of the population live in areas where they will not be able to receive digital terrestrial signals, and pockets of the country would remain unable to receive it for the foreseeable future. ITV were therefore going against their public service responsibilities.
Richard Eyre, chief executive of ITV, was quick to point out that ITV would still be available on analogue television, which currently reaches 99.4% of the population, and therefore the network was not depriving Sky subscribers of its service, as Sky claimed. He also stressed that both Parliament and ITV were committed to developing digital terrestrial’s reach until it was at least equal to the present analogue reach before discontinuing analogue (late last year, the ITC decided that it was too early to set an analogue switch-off date (see Newsline)).
Mr Eyre added that there was no guarantee that digital satellite’s reach would be comprehensive. Indeed, he quoted a TBS Limited study, that estimated its reach at around 70%. The 1996 Broadcasting Act included a ‘must carry’ provision for ITV on cable, but had excluded this ‘must carry’ or ‘must offer’ provision in respect to satellite. ITV reacted to that by investing £150 million on a digital terrestrial platform and its new commercial channel, ITV2.
ITV’s chief executive left in no doubt his opinion of the reasons for Sky’s campaign, and said that commercial logic was at the heart of Sky’s interest in the ITV services, not concern for the public interest. he commented: “Sky’s commercial interest lies in moving its market dominance of pay television in the analogue world into the digital world. Sky’s position is nothing to do with the public interest and everything to do with maintaining its market dominance.”
Sky’s Ian West expressed concern that ITV would limit the appealability of some European Champions League football games, making them unavailable to people who weren’t cable or digital terrestrial subscribers. He also claimed that it was unfair for Sky to be forced to have its sports channels carried on digital terrestrial, while ITV could deny its channels to digital satellite, especially as ITV’s viewing share was vastly higher that Sky’s; “Millions of people will simply be unable to receive Champion’s League football – the signal will just not reach them. While Sky provides the Premier League to all platforms, ITV is trying to withhold their football from satellite. That is manifestly wrong.”
In the past, Sky has accused ITV’s strategy of refusing to join its digital satellite platform as anti-competitive. However, ITV’s Richard Eyre pointed out that Parliament and the ITC have encourage competition between digital platforms to protect consumer interests, and to prevent any one media player from assuming a market dominant position. One of ITV’s major incentives for refusing to join digital satellite is its reluctance to add to what it considers Sky’s monopolisation of the market.
Richard Eyre commented: “Sky has achieved market dominance of pay television in the analogue world. And by offering a wider range of pay TV services than digital terrestrial television,aggressively marketed at a cut price, Sky hopes to establish a market dominant position in the digital world as well. Having ITV and ITV2 available as part of its package is the final piece in the jigsaw for Sky, ensuring that it is able to offer the satellite viewer every available mass audience channel.”
The MPs’ reaction to this debate was to lament the unnecessary complexity of digital television, and to argue that this competition between media giants could well damage customers’ interests.