Prebble with a cause

ONdigital’s Stuart Prebble is a man on a mission: to beat BSkyB to the pay-TV crown. As he goes on the offensive with a raft of expansion plans, David Benady assesses whether his bold claims are well-founded

If you say something often enough, it might just come true. ONdigital chief executive Stuart Prebble never tires of insisting his company is going to be the UK’s biggest pay-TV provider and overtake BSkyB within a few years.

Few industry observers give the claim much credence, but the more you doubt Prebble, the more emphatic he becomes. And when he becomes emphatic, his broad forehead starts to wrinkle and his large frame tenses slightly. Phrases such as “straightforwardly”, “very, very” and “absolutely” pour out.

“I don’t have the slightest doubt that… we will straightforwardly be the dominant pay-TV platform in the UK,” he proclaims.

And to ram home the point that it is ONdigital’s destiny to achieve a leading position in the pay-TV market, he adds: “Even if we were incompetent, that would still be the case.”

But Commerzbank media analyst Gareth Thomas says: “That’s a very bold and ambitious claim. BSkyB is the best brand – it is synonymous with pay-TV. BSkyB has a big lead: it has 4 million subscribers and ONdigital has 750,000.”

Prebble says analogue TV should be switched off by 2010 and all new TV sets will be digital. “When that happens, people will be able to get ONdigital as easily as phoning us and us sending them a credit card-sized smartcard in the post. At that point, who wouldn’t do it?”

He believes there is a limit to the number of people who will take satellite and cable, and that, when the analogue switch-off comes, signing up for ONdigital will be the simplest and most user-friendly way for viewers to access a range of digital services.

There’ll be no satellite dishes, no gardens to dig up – just a digital TV and smartcard. “There are 15 million households which have yet to say ‘yes’ to pay-TV,” says Prebble, indicating the scope of his expansion plans.

Prebble this week unveiled some of the policies he believes will give ONdigital a leading position in the pay-TV market.

On Tuesday, he published ONdigital’s uptake figures for the last quarter. They showed subscriptions up 15 per cent, from 673,000 to 774,000, to the end of June – a similar rise to the last quarter.

Prebble believes the channel is on course for 1 million subscribers by the end of the year, and 2 million at some point next year. He claims this is when ONdigital will finally show a profit and be able to pay back some of the £473m invested so far by joint owners Granada and Carlton.

Yet rivals claim the figures are being massaged as subscriptions are being sold on the cheap through online auction sites such as QXL.com. “Your chance to experience the finest digital TV at only a fraction of the normal cost,” reads the QXL spiel. One year subscriptions are being auctioned for as little as £26, compared with the full price of about £84 for the basic package.

Prebble has also outlined ONdigital’s plans to launch a premium sports channel to rival Sky Sports One, Two and Three. This will pool the major sports rights ONdigital has bought, including the Nationwide Football League, Worthington Cup and ATP Men’s Masters Tennis. The channel has yet to be named.

ONdigital still has to confirm whether the Uefa Champions’ League, which is already available with its service, will be part of the premium channel offer – or how much it will all cost.

Yet another development is the launch – planned for September – of a “Net-top box” that will offer what ONdigital describes as “full Internet access”.

Web-aficionados may find its offer rather sketchy. It will allow viewers to access the Net while watching TV, and to print pages on a low-cost printer. Nevertheless, it will lack some of the advanced Net technology many surfers have become accustomed to. They will not be able to watch video on the Net, nor will it be possible to download software.

Breaking the Net barriers

Still, the Net needs to be simplified if it is to become a mass-market tool. Web-heads can stick with their PCs, but the mass market will probably want an easier way to experience the Net. “We’re trying to take away two barriers to entry to the Net: the cost of PCs, which is the big barrier, and the fear that the Net is all too difficult.

“The technology we have developed is very user-friendly… We believe we are the first. Everyone that we show this to responds by saying it’s much better than they thought it would be… Absolutely everyone.”

It was revealed last week that ONdigital has been lobbying the Government to break up BSkyB for having “consistently and systematically abused its dominant market position”. ONdigital proposes separating BSkyB’s content channels and network.

But BSkyB replies: “It is peculiar for ONdigital to say that broadcasters should not run distribution platforms when the cable companies, and even ONdigital itself, provide their own content.”

It is a strange intervention by Prebble. If he seriously believes ONdigital will overtake BSkyB in the near future – however much BSkyB may abuse its position – what is ONdigital’s problem?

You’d think he already had his work cut out for him. Running a joint venture, especially one between Carlton chairman Michael Green and Granada chief executive Charles Allen, requires particular skill. Observers have questioned whether the launch of ONdigital Web access will put it in direct competition with Granada’s broadband offering PowerChannel – also expected to launch in September.

Prebble dismisses such concerns: “We will have an arrangement with PowerChannel whereby people who are not subscribers to ONdigital will be able to use it. We’re very comfortable with the relationship between the two.”

There is also the question of ONdigital’s flotation, which is supposed to take place this year but has been disrupted by the proposed merger scenario between Carlton and United News & Media, with Granada in the wings. Prebble says: “Plainly, one of the things that we need to do – or they need to do – is sort out the existing situation.”

There is talk of other investors taking a stake in ONdigital. Prebble admits to holding talks with telecoms companies, and analysts believe ONdigital also held discussions with BT. A deal with BT would enable ONdigital’s interactive telephone response system to be speeded up using ADSL connections.

Prebble seems to believe it is his responsibility to attack BSkyB at every turn – maybe in the same way that Richard Branson or easyJet founder Stelios Haji-loannou have attacked established interests when launching alternative carriers.

Distinct positioning

Prebble even criticises BSkyB’s ads: “I think one consistent thing is that we have always tried to have some humour, and that is a contrast to BSkyB. We’ve always tried to position ourselves as very distinct from BSkyB. There are lots of perspex and steel plinths and people shouting at you, and we’ve tried to be a bit friendlier and a bit more humorous.”

Lorna Tilbian, a media analyst at West LB Panmure, is upbeat about ONdigital’s prospects, although she believes it will only achieve second place behind BSkyB, while staying ahead of NTL.

There will be many more skirmishes between BSkyB and ONdigital as the digital revolution gets underway. And if Prebble keeps saying he will overtake his arch-rival, maybe at some point in the future his wish will come true.

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