XM / Sirius Merger could be approved imminently.

There are a lot of reports out there, far too many to link, but they all suggest, like this one, that approval for the merger between XM Satellite Radio and Sirius Satellite radio is due to come imminently from the US Department of Justice.

This smells to me very similar to the British Satellite Broadcasting / Sky Television, which was allowed to go ahead, despite the fact that it was against the rules that BSB were told to work by by the IBA. Sky had the deep pockets of Rupert Murdoch and News Corp to fall back on. BSB had no such benefactor, and most of their shareholders were worried about the upcoming 1991 Channel 3(ITV) licence process.

Sky were the 'winners' in that so called merger. They basically absorbed BSB into their company with the token changing of the name to "British Sky Broadcasting" rather than tell it like it really was, Sky basically swallowing up BSB.

The real similarity here though is that XM and Sirius, like Sky and BSB, are both losing money, hand over fist, quarter by quarter. Because these two are the only competing satellite radio services in the US and Canada, this really shouldn't happen, in much the same way that BSB and Sky should not have happened. But you know it's going to. History says the merger will go ahead, the market says the merger will go ahead, my head says the merger will go ahead, but my heart does not want it to. I cannot abide the creation of a monopoly by a market that is supposed to favour competition.

The shareholders have voted for it, now we wait for the confirmation from the DoJ that, as we expect, this merger will happen, despite what we know to be in the better interests of everyone. If the market is so good, then let the market decide, and if the market decides that neither should survive, then so be it.

OFCOM investigates UK pay TV

At the request of BT, Setanta, Virgin Media and Top Up TV, OFCOM are to investigate the world of UK based pay television.



Whilst I am all in favour of an investigation, I do have my doubts as to whether anything will happen as a result. Ofcom have yet to take any deicisions that have real impact on the industry, and in pay TV, there needs to be something that has to happen.

You see, BSkyB is THE dominant force in UK pay TV , and it is the only one with national coverage across the UK. Virgin Media has a lot of coverage in the cities, but because of the prohibitive cost of cabling rural areas, has no coverage outside of the cities. Digital Terrestrial currently only has about 70% coverage, but that will grow as the analogue signals are switched off in the various areas until 2012.

Sky have already seen off two potential opponents in the pay TV market, first by merging with British Satellite Broadcasting (BSB) in November 1990, and second with the collapse of On/ITV Digital in March 2002. It's only with the recent-ish meger of the NTL and Telewest cable operations that cable has emerged as any kind of a powerhouse in the pay television arena, and it is still limited by the fact that not every house in the UK has a cable connection.

I would like to see Sky undergo some kind of limitation, possibly have them lose control of their EPG. After all, they cannot control who broadcasts on the satellites, as Sky do not own the satellites. The Satellites themselves are owned by a company called Societie European De Satellites, based in Luxembourg.

I would also like to see Sky denied permission to create a pay TV service on DTT. They want to have Sky One, Sky News, Sky Movies and Sky Sports, available on a subscription only basis on DTT, much in the same way that when they started on Astra 1A back in February 1989, they had Sky Channel, Sky News, Sky Movies and Eurosport (at the time they were a partner in the EuroSport operation, but left it after merging with BSB.)

Sky are like Microsoft, they are too dominant in the market, and do need to be reined in. Sky have behaved in a very anti-competitive way, in forcing all the channels in their package to accept much lower subscriber rates, including the Virgin Media channels, whilst at the same time, trying to force up the rates that Virgin Media pay for the Sky channels. If this isn't classic anti-competitiveness, I don't know what is.

I would like to see Ofcom actually do something about Sky, but I don't actually believe that Ofcom will do anything. Such a lack of action, in a market that actually demands it, would be postitively criminal.

ITV in crisis

ITV has been facing up to some major problems recently, and arguably, it has not been coping very well with them. In what has been a tough time for the commercial broadcaster, the ITV companies have faced major problems with ITV Digital, falling revenues from advertising, falling audience figures with BBC1 and Multi-channel TV benefiting the most and a greater than average number of new programme failures, including some very high profile ones such as Shafted. The question is, what happened to ITV to allow it to fall so far?

There are a number of potential reasons why ITV’s fall has been so bad. One potential reason can be traced all the way back to the creation of Independent Television back in 1954. Originally, the Independent Television Authority was supposed to have created 2 commercial networks, each with additional licenced programme providers. But it ended up being only one commercial network, and no additional programme providers, which made things difficult for Associated Rediffusion and ATV London in the initial months of Independent Television. These days, such an arrangement with additional programme providers licenced for ITV would undoubtedly have seen more of the old franchisees become production companies, and also some good companies that never quite made it to being franchise holders, providing programming. It would also make for a more competitive ITV in terms of programming.

Another potential reason why ITV is in possible crisis goes back to the 1990 Broadcasting Act. In the act, it allowed the ITV companies to merge with each other, and potentially be bought by other companies too. Why was this a bad thing? Well, ironically for the same reason that lack of additional licenced programme providers was a bad thing. Instead of having a competitive ITV with 15 companies and the threat of losing their franchise if they didn’t perform up to scratch, you now have just 5 companies, who know their licences are pretty safe, and therefore less competitive, less challenging and less satisfying in terms of programming.

Another potential reason lies in what has been recently a major situation in broadcasting terms, and that is the situation between ITV and Sky. In 1998, ITV decided not to launch on Sky Digital, despite the fact that BBC1, BBC2, Channel 4 and Channel 5 were all launching on both Sky Digital and On Digital. On Digital, nowadays know as ITV Digital, is owned by Carlton and Granada, the two biggest ITV companies. Granada have some history with Sky as Granada was involved in the British Satellite Broadcasting venture of 1990, which ended with BSB merging with Sky. Carlton had channels of its own that it didn’t want on Sky, and had previously restricted them to just Cable. Carlton and Granada felt that On Digital needed an advantage over Sky Digital, and they felt that ITV would give them that advantage. So ITV refused to launch on Sky Digital, and also refused to launch ITV2 on Sky Digital. This move was to prove costly in financial terms with many millions of pounds of advertising revenue missed because of this one move. ITV1 and ITV2 were to launch in 2001 on Sky Digital, but the damage had been done. The move had cost them advertising revenue, and it had cost them viewers too, and the longer they stayed off Sky Digital, the more it was going to cost them in terms of viewers and advertising revenue. So, they finally put up and launched on Sky Digital.

Another potential reason lies in the fact that On/ITV Digital always looked to compete with Sky Digital. Alongside the fact that ITV had been having something of a tiff with Sky for many years, going back to the lack of agreement between Sky News and ITN, over ITN acting as programme producer for Sky News, in 1988, and continuing through Sky’s failed attempts to replace ITN as ITV’s news provider, when you put all that together, you see ITV trying to compete with Sky, one by not providing ITV and ITV2 on Sky Digital, also by trying to use ITV’s advantage as a terrestrial broadcaster to persuade people to go to On Digital, owned of course by two of the biggest ITV companies. Put that very complicated mix together, and what do you have? You have a channel provider on Digital Terrestrial, trying to compete with a channel provider on Digital Satellite, where really they shouldn’t be competing at all. On Digital was the only licenced digital pay-TV provider for Digital Terrestrial, and Sky Digital was the only digital satellite pay-TV provider. In theory, they shouldn’t have been competing with each other as they were two different markets. However, in practice, people were comparing the Sky/On situation to the Sky/BSB situation of 1990, long before either side were actually transmitting digital programmes, and this wasn’t helped by On Digital themselves, whose advertising was at least initially quite blatantly stating their competitive agenda.

Whichever reason it was, and whichever way you look at it, it comes down to competition. Sky had had no real competition in the Multi-channel arena after their merger with BSB, and ITV in itself was less competitive because the number of ITV companies had dropped from 15 to 5, and because the franchises were no longer being seen as under threat every whit and while, so there was no pressure on ITV to perform. Now ITV is in this situation. To this writer, it looks like a crisis, a crisis of ITV’s own making. They wanted the ability to merge stations, to eventually become 1 giant national ITV. They wanted the franchises to be easier to renew, therefore creating less pressure, and supposedly more time for increased investment. They wanted the greener, less regulated grass on the other side of the fence. Now they’re there, they are finding it’s leaving a foul taste in their mouths, but instead of backtracking, ITV seek to blame the BBC and Sky for their own problems. There’s an old saying. It says, “You reap what you sow”.

So, how can ITV get themselves out of this predicament? Well, the only way they can do it is to go back to being more regulated, and back to being a commercially funded, not commercially driven, public service broadcaster. They must waste less money on unnecessarily extravagant set designs, cut down the amount that is just given away to shareholders, and start re-investing in the people who really count, the viewers.