|
[BIB] [SkyDigital] [Open] [Sky Interactive] [Sky Global Networks]
The British Interactive Broadcasting (BIB) company was the consortium set up to deliver digital TV called SkyDigital and interactive services called Open. The original partners were BSkyB (32.5%), BT (32.5%), Matsushita (15%), and HSBC Holdings (20%). BSkyB in turn is 40% owned by Rupert Murdoch's News Corp and 20% by the French Vivendi Universal. The service was officially launched in the UK on 1 October 1998.
In May 99 BSkyB announced that it was to "give away" (actually loan) its dishes and set-top boxes (previously sold for £200) and offer cut price telephony at a cost of £187m ($300m). To meet consumer demand it had to recruit an additional 2,650 staff and as a result cancelled dividend payments until further notice.
In July 2000, BSkyB agreed with HSBC Holdings and Matsushita that it would buy them out for a £525m all-share deal. This would give BSkyB an 80.1% controlling interest in BIB. BT, the other shareholder, diluted its 32.5% share to 19.9%. BSkyB injected an estimated £250m into Open to help it reach breaks even.
By November 2000, BSkyB's subscriber base had risen to almost 5m but so too had the losses. Operating expenses had risen over the year by 33% to £484m. Part of this was due to higher programming cost, part due to the cost of taking on the new subscribers, and part due to the cost of switching to digital. Churn was under 10%, half the level of its cable and terrestrial TV rivals. The stock was 1050p compared to 2,158p six months earlier in March 2000. Six months later pre-tax losses were still mounting - up to £112m from £61.5m for the half-year.
In February 2001, BSkyB announced new revenue targets, a substantial part of that it hoped to achieve through interactive facilities, especially betting. At that time current average revenue per subscriber was £286. The end 2001 target was £300 and the 2005 target was £400. In the first half of the current trading year to 31 December 2000, interactive services generated £37m revenue with betting being £33m of that (almost 90%). Other revenue comes from sales commissions on e-commerce and online telephone call charges.
SkyDigital has been so successful in switching customers to digital that BSkyB in July 2000 it was predicting that analogue broadcasting could stop in August 2001, as much as 17 months earlier than planned (see UK digital subscriber numbers). This is estimated to save the company £60m per annum.
However, it was not until May 2001 that regulatory approval was received to buy out HSBC Holdings and Matsushita. BSkyB then bought out the remaining BT share for £147m in shares to take exclusive control of BIB. The company then folded into Sky Interactive (see below).
As at July 2001, BSkyB has 5.4m UK subscribers with just about all of these digital. See UK Customers Base. Losses for the year ending 30 June 2001 were £514.5m. With the switch to digital almost complete it expected to be cashflow positive by the end of 2001. Since the end of 1998 it has invested a total of £2.4bn in converting to digital including new channels, "free" set-top boxes and marketing. Analysts expect profitability between 2002 and 2004. The Open interactive company made losses of £199m and the German joint venture with KirchPayTV lost £116m. With the buyout of its partners, Open has now been folded into BSkyB. The interactive side made £11 per subscriber. Churn rate is about 10%. Advertising was 12% up compared to 17% in the previous year but non the less comparing very favourably with ITV whose revenue fell sharply. BSkyB also has over 4m subscribers in Ireland.
In July 2001, the company was notified by the European Commission that it was being investigated for suspected anti-competitive behaviour.
If all goes according to plan, Sky Interactive will be merged into Sky Global Networks.
SkyDigital is the brand name for the digital television service of BSkyB. A n initial pilot systems was followed by a £17m advertising campaign and the service was officially launched in the UK on 1 October 1998.
SkyDigital provides 100s of TV channels and movies on a subscription basis plus the BBC's free-to-air services but not the free-to-air services of its rival ITV. See here for Sky Digital's services. Many of SkyDigital's channels are also made available to the 2 cable operators, NTL and Telewest as well as to the digital terrestrial operator ITV Digital.
SkyDigital also provides interactive facilities, especially for sport. These include features such as selecting a camera view, calling up additional facts and figures on the sports men and women, and replaying highlights. There are also links to Open for buying merchandise and placing bets. The interactive facilities were also provided in the 2001 general election.
Launched in November 1999, Open provides an electronic shopping mall, information and financial service. Clients include major High Street names such as Woolworths, Abbey National, The Woolwich, Dixons, Somerfield, and WH Smith. Open is an "exclusive club" needing a reported £1m investment. It operates as a closed "walled garden" with private telecommunication links to the clients. There is no access to the internet other than email. See Value Added Services and commercial examples of the interactive services.
In May 2001, with mounting costs and following the buy-out of its partners, BSkyB announced a £40m restructuring charge for Open. The London offices were to closed and 300 staff made redundant. Open would now be part of a new Sky Interactive. John Florsheim will head the division. All told, BSkyB had invested £700m in online services including the internet and Open.
BSkyB has a joint venture with the telephony company Kingston Communications and has various internet ventures.
BSkyB, Asia based Star TV and other subsidiaries were to be part of the restructuring of News Corp into Sky Global Networks at the end of 2000. However, due to the sudden downturn in advertising revenues for all media companies and the knock on effect on the company's share price, the float was delayed until 2001. Nether-the-less, Murdoch continued to court partners. One possible ally was Microsoft, with the company considering taking a $1bn, 3.5% stake in Sky Global. That would value the new company at $28bn but less than the earlier prediction of up to $50bn. For Bill Gates it would provide the first major customer for its set-top boxes though the company is having technical difficulties with the equipment.
The initial public offering would be for $10bn. Talks had earlier been held with the media giant Vivendi (that owns 22% of BSkyB), and with two top US satellite companies, DirecTV and EchoStar Communications. Liberty Media has already agreed to take a 4.8% stake.
If this all goes according to plan it will become the largest IPO in world history and a truely global mega company.
Back to the
content page for Players, Service (Delivery)
Providers
Note: This sub-section was originally part of the Player section, where references up to 22 July 2000 will be found.
Content Providers: [Satellite] [Cable] [Terrestrial] [Telephony] [Retailers]
Players: [Service (Delivery) Providers]
[Content Providers] [Value
Added Service Providers] [Transmission
Companies]
[Hardware & Software Suppliers]
[Regulatory & Standards Bodies]
[Controversy]
[Digital TV Content]
[Introduction] [Summary]
[No. Customers] [US
Scene] [European Scene]
[Scene Elsewhere]
[Delivery Channels]
[Players] [H/w & S/w]
[EPGs] [Existing Services]
[New Services]
[Audience]
[Disadvantages]
[Advantages] [Sceptics]
[Advertising] [Financial
Services]
[Mediums Overview]
[SIM Report Mediums]
[More
Recent Developments
]
[Which to Use?]
[Other
Technologies]
[SIM Overview]
[One to One Marketing]
[Mass Customisation]
[Interactive Mediums]
[STEP Analysis]
[SIM Executive Summary]
[SIM Report]
[SIM Project]
[SIM Framework]
[SIM Methodology]
[SIM Illustrations]
[SIM Links]
[Key Information & Resources] [Guest Contributions] [List of Support Topics] [What's On]
[Contact]
[Company]
[Disclaimer]
[Privacy]
[Legal]
[Copyright Fair Use]
[Feedback]
[Publications]
[Publicity]
[Why Ads?]
[What's New]
[What's Coming]
[Technical Info]
[Home]
[Site Search Form]
[For a Full list of Contents see the Site Map]
This page updated July 2001 © Managing Change 1997,98,99,2000,01 www.managingchange.com