Monday, 11 July 2011

The Sky Monopoly - A Brief Background

The journalist and writer William Shawcross has been a lone voice of support for Rupert Murdoch, whose institutions and their working are so much at the forefront of news coverage these days.  Unfortunately, I think Mr. Shawcross's recent praise of what Murdoch has done for British media over the years is a little short of the mark, and I feel that some clarification and corrections are required.

On Sky News, and In a letter to the Daily Telegraph, Mr. Shawcross claimed that it was Murdoch who took on the print unions and therefore was responsible for dragging the industry, kicking and screaming, into the late twentieth century.  Certainly the virtriol flowing at the gates of News International (NI) in Wapping back in the 80s was as a result of Murdoch introducing new technology and working practices, but it was Eddie Shah, and his newspaper Today that instigated the new approach some time previously.  Murdoch had simply been watching from the the sidelines.  As Shah took all the initial flak (from which Today was to eventually succumb: it was later absorbed into the NI empire and subsequently closed down) Murdoch bided his time, before moving forwards in the smoother waters of a wake that had been cleared for him.

And it was a similar strategy that Murdoch used with Sky Television.  Mr. Shawcross claimed Sky broke the 'monopoly' (sic) of the BBC and ITV: he is wrong.  Since 5th November 1982 Channel 4 was also on the scene, and the UK had four, not two, national terrestrial channels.  Yet other channels also existed, and the fact that Murdoch unscrupulously eradicated all of them - or forcibly absorbed them into his own empire - has gone unmentioned in the current melĂ©e.  So let's look at Sky, within Mr. Shawcross's context that monopolies are a bad thing.

Sky Television was not Rupert Murdoch's idea.  Invented by a British scientist, it began life as Satellite Television Limited, and was a single channel uplinked from Molinare in Foubert's Place in Soho. Initially the channel was then downloaded and redistributed by cable television service providers across the UK.  In the mid-80s these were few and far between - Westminster had one, Milton Keynes another etc., - and media entrepreneurs saw the chance to create their own branded 'channels' which would be distributed across these small networks without having all the usual regulatory and transmission difficulties.  These channels were often little more than repeated two-hour compilations of old cinema films and outdated TV series, delivered - by road, on cassette - to the cable head-ends for distribution to homes. The opportunities then starting to arise, of delivering via satellite to the cable operators, would offer flexibility, cost-effectiveness and a greater number of markets for the same product. Business plans relied on an ever-growing number of subscribers, the subsequent increase in revenue from which would be invested in better quality programming: a virtuous circle.

Then Astra came on the scene, a satellite operator offering broadcasting directly to domestic receivers.  Only when the opportunities offered by this 'Direct-to-Home' (DTH) satellite broadcasting arrived, did NI enter the fray.  It bought out Satellite TV and renamed it Sky.  At the same time, the US networks who had recognised the potential of the UK's cable systems, also saw the possibilities offered by DTH in the UK and Ireland, and started their own services.  MTV, TNT (as CNN, TCM and Nickelodeon), Discovery and others gradually bought space on Astra.  DTH had been identified as the future of TV in the British Isles.

Inevitably, the British Government, meddling for no good reason, stuck its oar in here and decreed that any UK regulated DTH should be transmitted using D2MAC, a more sophisticated (i.e. complex) transmission system than the PAL system already in use terrestrially.  Murdoch took a risk: he had set up Sky as a pan-European channel and did not need to comply with the notions of the UK government. He  rented transponders on Astra and broadcasted in PAL.  It worked - and was cheaper and more acceptable to the market because it used technology everyone already had.  Four times as expensive, the 'squarial' based D2MAC system was dead in the water.  British Satellite Broadcasting, a consortium of major ITV broadcasters, publishing groups and UK technology industries championed by the UK authorities, stood no chance as, for a short time, the two incompatible systems ran side by side.

No-one benefitted.  Eventually, and as money haemorraged from both operators, the authorities, committed to encouraging satellite broadcasting but determined to be able to regulate it, forced a merger.  The 'Satellite' in BSB became 'Sky' and the essence of what we have today came about.  Murdoch currently owns 39% of BSkyB.

However, in his desperate race to achieve the critical market saturation NI desired, Murdoch threw money at product: he bought out film studios, movie catalogues, a US TV network and changed the face of sport - not least UK football - forever.  In doing this, he also ruined any chances for other UK based organisations to seek to provide alternative programming.  Priced out of programme markets, any channel lacking the funding Murdoch could contrive to lay his hands on would disappear from sight.  They disappear even to the present day, as NI continues to pay over the odds for programming and rights, not just to ensure an audience but to eradicate all chance of competition.

Remember Superchannel?  It, with others such as Premiere, Matinee and HVC were among the first to go as Sky forced its presence onto the market.  Following the formation of BSkyB, its channels Galaxy, The Power Station (with Chris Evans presenting chart shows from the seaside on sunny days), The Movie Channel, The Sports Channel and Now soon disappeared.  Ever since, alternatives outside the Sky monopoly have been short lived, their survival dependent on either being absorbed into the Sky empire or paying through the nose to be delivered via the Sky transmission platform (and its lucrative electronic programme guide).  Powerful operators such as Discovery, MTV, National Geographic and Turner are too big to stay in Murdoch's sights at the moment and their programming currently complements Sky output, but others such as Setanta, U>Direct, Men & Motors, Virgin/Channel One and Bravo have all since passed into oblivion, manipulated into extinction by Sky's obsession with being the sole provider.

Bearing all this in mind, Mr Shawcross' s claim that Rupert Murdoch did wonderful things by breaking the BBC/ITV monopoly rings a little hollow.

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