Why BBC’s split from Sky is a setback for digital TV

The BBC’s decision to create its own free-to-air satellite market will damage digital, unless ITV can match its programming efforts, warns Paul Longhurst

Greg Dyke’s announcement that the BBC will switch to an unencrypted digital service through the Sky Platform has shaken up the debate on free-to-air digital television.

Dyke nicely wrapped up the detail in the powerful message that the switch enables the corporation to put to better use the money usually given to Sky for encryption, which apparently amounts to &£85m over the next five years. But the real message to the public is that free-to-air digital TV is a serious option across more than one platform.

Digital television is available terrestrially for as little as &£80 through a Freeview set-top box, and now Sky subscribers are likely to become more aware of the possibility of cancelling or downgrading their package and monthly subscription while still being able to receive a significant number of popular and high-quality channels.

So in one massive swoop of press coverage, the BBC has launched the second phase of its digital TV marketing campaign. This is good stuff for those in government who are keen to see a total switch from analogue to digital as soon as possible. Or is it?

BSkyB recently warned that it could hamper Labour’s plans to switch off analogue TV transmissions if it is forced to slash the amount it charges to distribute ITV and BBC channels to satellite viewers. In a veiled threat, the broadcaster told the Government it could slow down the take-up of digital TV in the UK by ending its policy of giving away decoders. It now appears that the BBC’s decision to use a new satellite to avoid encryption payments altogether may have wrong-footed BSkyB.

It is interesting how quickly ITV was able to publicly compliment the BBC. ITV will clearly be considering its options now, but the broadcaster would be naive if it sees the BBC as a bedfellow.

A situation where ITV and the BBC effectively act together in these matters takes no account of the real war between the two – the running battle for audience share.

From an advertiser’s perspective the BBC’s eight free digital channels that broadcast high-quality and potentially very popular programming without advertising is not good news.

If the BBC is able to develop a firm hold on satellite audiences in 6.5 million homes (as well as Freeview and cable homes), then ITV’s offering of two free channels (plus news) will not provide the long-term competition that advertisers require to ensure a sustainable audience share growth against the BBC.

In this surprisingly sudden step-change in UK broadcasting, ITV must consider two more free digital channels while shoring up its relationship with Sky to deliver complementary programming and scheduling against the BBC and offer advertisers the audiences they need.

Paul Longhurst is managing partner of The Allmond Partnership

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