The BSB / Sky Merger.
(Chris Wathan)

 

In 1990, British Satellite Broadcasting (BSB), and Sky Television, merged to form British Sky Broadcasting (BSkyB), the Sky that we know today.

 

The Beginnings - 2 companies

Before looking at the present company, it is first necessary to look at the original two platforms, the events causing them to merge, and the changes as a result. BSB In 1986, the IBA decided that the UK should have it's own DBS (Direct broadcasting via Satellite) service. The license was eventually awarded to British Satellite Broadcasting (BSB) in late 1988/early 1989. As might have been expected of the IBA, BSB were not allowed to just introduce the system as they though best, but were tied into conditions. Firstly, BSB could not just rent space on third-party satellites (which Sky did, and still does today) but must pay for the construction of their own. They must also pay for the construction of one backup satellite for every broadcast satellite that they construct. Also, in a failed attempt to improve picture quality, BSB's receivers must use the MAC picture system instead of the UK standard PAL.  

Following completion of their own lavish offices (which now house shopping channel QVC - and was the home for the failed ITV Digital service!), they arranged for the construction of two satellites, Marcopolo I and Marcopolo II. These satellites had only 5 transponders each (the Astra satellites of the day had 16). Since no more satellites were ever launched for BSB, and Marcopolo II was only a backup for Marcopolo I, the service would never have more than 5 channels.  Just getting the Satellites constructed and in orbit took some time. MAC hardware for the receivers held back the project further. And then dealers began to point out that with most TV sets, MAC didn't look any better than PAL.  

The distinctive square dish used to receive Marcopolo (commonly known as a 'squarial') suffered supply problems. Setback after setback meant that BSB did not launch until early 1990, having held the license for some 14 months. At launch BSB had about 700 systems installed, whereas rival Sky Television, despite being inferior in almost every way (in terms of hardware, programming, and sheer number of channels, with Sky only having 4 originally), had some how managed to accumulate around 750,000 installations. 

BSB's original (and as it would turn out, only) channel line-up consisted of:

Galaxy - a general entertainment channel. Imagine Sky One, UK Gold and ITV all in one channel, and that's pretty much what Galaxy was.

Now - a 'lifestyle' channel, also incorporating the arts. Living, UK Horizons, UK Style, that sort of programming, again all rolled into one.

The Power Station - Music and youth entertainment. Same as MTV really.

The Movie Channel - Pretty self explanatory really. Showed latest blockbuster movies. This was a subscription channel costing subscribers 11 per month. The channel still survives today as part of Sky. The original name lasted until 1998, making this the longest surviving remnant of BSB. The channel now goes by the name 'Sky Premier' ('Sky Premier 1' on Skydigital)

The Sports Channel - Again pretty self explanatory really. Again, still survives today as part of Sky. However, the name was changed as soon as Sky moved in on it, renaming it 'Sky Sports' in late 1990. Soon after, it was changed again to 'Sky Sports 1' when Sky launched additional sports channels.

Sky Television were always entirely independent. They had no UK license, they rented space on other company's satellites rather than constructing their own and they used standard PAL transmissions. The history of Sky goes back a little longer than that of BSB. Launching in 1984, Sky Television were originally a pan-European broadcaster, with affiliates in many different countries, and all through only one channel, Sky Channel. In 1989 they were bought by Rupert Murdoch's News Corporation. They were bought to develop their station into a multi-channel service designed specifically for UK viewers. First up was their move to the Astra 1A satellite. This had 16 transponders, and as Sky were their first customers, all 16 were available if Sky wanted them, leaving plenty of room for expansion. Sky's multi-channel service was put together in less than a year.

With none of the restrictions that were imposed on BSB to hold them up, the service took shape rapidly. The BSB service may have existed for longer, but Sky launched theirs first. This gave them a monopoly which made up for Sky's (considerable) shortcomings. If BSB had managed to launch before Sky, it is unlikely that Sky would ever have got off the ground, as their original service was, in almost all aspects, inferior to the one that BSB would be offering). So, launching in late 1989, Sky's original four-channel lineup was:

Sky Channel - What is now called Sky One. Same then as it is now, general entertainment. Only it was more than a little tacky to begin with.  

Sky News - 24 hour rolling news service. Still continues today. The first of it's kind in this country, and something which BSB did not have (although they did have regular scheduled news programmes on all of their channels as BBC1 and ITV have). Still running today.

Sky Movies - Continues today under the name Sky MovieMax. Pretty self-explanatory. Unlike BSB's The Movie Channel, this channel was (originally) free to air, which gave Sky a slight edge. However, BSB's movies tended to be more recent than Sky's, so there is a price to pay for getting a freebie.

Eurosport - Still broadcasting today. European sports channel, joint venture between Sky and someone else whose name I can't remember. (Edit August 2003: It was a joint venture between Sky and the European Broadcasting Union - thanks to Steve Mosby for that information).

 

The Merger

BSB was becoming something of a disaster, losing vast amounts of money every day. Sky was in a better position, but not that much better, still losing a considerable amount of money. The two services could not continue to exist by themselves.  6 months after the launch of BSB, the two companies negotiated a merger. The BSB and Sky Television (or Sky as it was commonly called) names would both go, and be replaced with BSkyB, or Sky as it is commonly called. Yes you've guessed it, despite being a merger on paper, in practice Sky, being in the stronger position, was really engineering a takeover of BSB. 

So what did this mean to the viewers? If you watched BSB on Marcopolo, from 2nd December 1990 you would find Galaxy and Now replaced with the newly renamed Sky One and Sky News respectively. The unbroadcast programming of Galaxy was incorporated into Sky One's schedules. However, with no lifestyle/arts channel on Sky, there wasn't a readily available channel on which to show the remaining programming of Now. So Sky created one especially for Marcopolo viewers. Occasionally, Marcopolo would drop Sky News, and replace it with Sky Arts, a channel devoted to bringing you everything that you used to be able to see on Now. This was only a temporary operation until the remaining Now programming had been shown, then it was Sky News all the time on Marcopolo. The Power Station was kept for a while (with the ident modified to read 'British Sky Broadcasting' rather than 'The Power Station BSB'), finally closing down in the early hours of 8th April 1991. It was kept because Sky were considering adding it to their Astra service. Eventually they decided to drop the channel, instead opting for MTV on Astra. Two hours after the final closedown of The Power Station, Sky Movies took it's place on Marcopolo. The Movie Channel was kept, although it's ident was completely replaced with a new Sky-branded one. This channel was also added to the Astra service. The Sports Channel was also kept, but was renamed to 'Sky Sports'. This channel was also added to Astra. After this tweaking, and after Sky Arts had come and gone, the channel line-up was:

Sky One - Astra/Marcopolo

Sky News - Astra/Marcopolo

Sky Movies - Astra/Marcopolo (now encrypted) 

Sky Sports - Astra/Marcopolo

The Movie Channel - Astra/Marcopolo (encrypted on both platforms)

MTV - Astra only

Eurosport - Astra only

With Sky adding new channels to their Astra service, which had gained additional capacity with the launch of Astra 1B, and other companies launching free-to-air channels on the platform (including a great number of foreign stations) their 5-channel Marcopolo service offered increasingly less value for money. Sky could invest money into it by adding more satellites and then increase capacity, but it would be rather expensive for Sky to have 2 incompatible systems to keep up-to-date, and so the Marcopolo service was closed down altogether in early 1992. Having broadcast for only 6 months originally, and for another 18 as Sky, BSB had been a failure, all of the hardware that took a lot of time and money to produce was now obsolete after only 2 years. The two Marcopolo satellites were sold off, renamed as Sirius I and Thor I, both in different positions. Marcopolo house was sold off and now houses shopping channel QVC. The satellites operated until 2003, then both were decommissioned by their new operators & sent to the junk orbit.

 

Why did BSB fail?

What went wrong with BSB? Why did a service which offered more than it's only competitor fail so spectacularly? Perhaps the biggest failing was the fact that Sky had launched before them. While a lot of people were still happy with the 4 channels that they had terrestrially, a lot of people also tired of having only 4 possible things to watch and so got Sky as soon as it was available. As it turned out, hundreds of thousands of people got Sky before BSB even launched. Most of the people who were interested in having a greater choice of channels had already opted for Sky. There was hardly anyone who still wanted a DBSsystem left for BSB to sell their service to. As a result, BSB launched with only a few hundred systems installed, and never really increased beyond this. 

Also, BSB had a pay-TV channel. While it was only one, pay-TV was unheard of in the UK at the time, and people were naturally cautious of something that they may have to pay more than the license fee for. BSB's equipment, being more advanced than Sky's, cost more for customers to buy, and more for BSB to maintain.

The real cause of the failure can probably be laid at the door of the IBA. While they never intended for BSB to fail, they locked BSB into a contract to build and launch satellites, implement new picture systems which were not standard in the UK (and still aren't today) and do other things which Sky were not required to do. This resulted in severe hold ups which allowed Sky to eat up almost all of the market that BSB was aimed at, while BSB were busy launching satellites and awaiting delivery of MAC equipment, Sky had launched and were building up a growing customer base. The IBA really should not have imposed on BSB's right to decide how to market it's service. Had it been allowed to develop things as it saw fit (unless it also wanted to use MAC and build it's own satellites), it would have been on the air before Sky and could have taken up Sky's market share.

BSB had greater financial outlay than Sky. The costs of building and launching the two satellites and developing MAC decoders required a high uptake of customers to recover these costs. The uptake was not high, consequently the costs were not recovered, and BSB found itself with losses that were double those of Sky.

 

After Marcopolo - Expanding the service

Dragging the ex-BSB Marcopolo system along with them must have been costing Sky a great deal. Although Sky's channel base started to build whilst Marcopolo was still there, once the platform was discontinued in 1992 the channel base started to explode. Over the next year or so, with the addition of Astra 1B and 1C to their service, channel after channel launched. In 1989 when the first affordable mass-produced satellite receivers were released in the UK, a future-proofed model would have 16 channels, allowing for the day (which at the time was seemingly years away) when all 16 transponders on Astra were filled. In 1991, with the launch of Astra 1B, a typical receiver would have 48 channels. But by 1992, with the increase in new channels seemingly unstoppable, many receivers came with 100 channel tuners. And it didn't stop there. A typical late-1994 model, with a wider tuning range designed for Astra 1D reception, would come with 250.

As it was, many of these receivers didn't require such extensive future proofing. Astra 1D was to be the last analogue satellite launched by Astra, the remaining satellites of the Astra 1x series would all be digital (1D itself can also be used for digital services, and was used on the SkyDigital platform until Astra 2B was launched). Following 1D's launch Astra had a total of about 65 channels on it's service, roughly half of these were part of the Sky package (although not all of them were owned and operated by Sky), and the other half were foreign (mainly German) channels. Ever since then, Analogue Astra has always had between 60-70 channels on it's service. The 100 channel tuners of 1992 will never be filled unless you also watch satellites other than Astra.

 

Wide-Scale Subscription

By 1994, Sky had grown to be roughly as big as it ever will be on Analogue. New channel launches were few and far between now, and had once again become quite a big event. The service offered incredibly good value. You just bought your receiver and dish, which cost little more than a good VCR, plugged it in, and you had immediate access to all of Sky's extensive service, providing something for everyone, and if you got bored of Sky, there was also a wealth of foreign stations available for you to explore. The only additional costs incurred would be an optional subscription if you wanted to receive Sky's two movie channels, everything else was free-to-air. 

So, that same year, Sky realised that they could cash in on the considerable popularity of their service. Instead of charging only for the movie channels, almost everything on Sky was now subject to a subscription. Full Pay-TV had arrived. Although some did not take out a subscription, many did and Sky was now viewed as something expensive and much condemned for it's subscription, but this was not really fair considering that the Sky subscription has always offered much better value for money than the license fee, and is a fairer system; if you don't watch Sky you don't pay for Sky, but even if you don't watch the BBC you still have to pay for them.

A few channels escaped encryption. Some of the decisions made here were a little hard to understand i.e. mainstream youth entertainment channel MTV was free, whereas shopping channel QVC (relegated to the 'specialist' section on Sky Digital) was encrypted. The free channels were re-organised soon after, and the decisions on what should be encrypted and what should be free became more understandable (notably MTV became encrypted and QVC became free).

Soon after the large-scale subscription was introduced, Sky added pay-per-view technology to their service (although it would be a few years before anything would actually be available through PPV). Initially as a vehicle to increase the sales from major sporting events, the service was expanded to movies as well.

 

End of the line for the BSB transmissions

End of the line for BSB.

 

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