(FORTUNE Magazine) – ONCE A VAST WASTELAND for viewers, advertisers, and investors, European television is turning into a go-go business. Guided by free-market policies, governments from Norway to Spain are selling their own stations or letting entrepreneurs into the game. Cable networks covering as many as 18 countries are getting started with programs ranging from My Favorite Martian to Britain's Dutchess of Duke Street. Farther-reaching change is on the horizon. Governments and private investors plan to launch satellites to beam programs directly into millions of households from Stockholm to Gibraltar. The revolution's most immediate beneficiaries are viewers. For decades European governments monopolized television, generally offering one to three tax-supported stations short on commercials but long on numbing programs. Says an executive who sells U.S. programs in Scandinavia: ''During prime time in Sweden you might get a documentary on pig farming in Jutland, followed by a debate about pig farming in Jutland.'' With viewers getting more riveting fare, advertisers see vast opportunity. Long stymied by ad bans and quotas on state-owned TV, they are swarming onto the new channels. And the advent of multinational networks has sparked a potentially powerful new trend: advertising that lets companies treat Europe as a single mass market instead of a patchwork of national markets. Gillette, for example, used to market a twin-blade disposable razor under different brand names -- Gillette Desechable in Spain, Radi & Getta in Italy, Blue II in Britain. Last year Gillette switched strategies by launching a uniform name -- Blue II -- across Europe. It ran a TV spot on a Europe-wide network as well as in individual countries. Dubbed in ten languages, the ad invited shavers to ''step into the blue.'' The European approach means big savings in packaging and ad production. Says Jeffrey Franklin, a vice president of McDonald's in Europe: ''Over the next five years the growth in TV could be the marketing revolution in Europe.'' Some of the biggest names -- and egos -- in European business are vying to become TV moguls. Among those who have launched stations or want to buy them are Australian media baron Rupert Murdoch, British publisher Robert Maxwell, French builder Francis Bouygues, and Jerome Seydoux, chairman of the private French trucking company Chargeurs. They are fighting dozens of other pioneers in the free-for-all of a suddenly liberated market. The first breakthrough came in Italy. In 1976 the Italian Supreme Court gave the green light to private TV stations. Hundreds quickly sprang up. A flamboyant former real estate developer named Silvio Berlusconi vacuumed up dozens of them to create Italy's first network. It took ingenuity because the court intended to allow only local stations broadcasting in limited areas. Undaunted, Berlusconi recorded programs and commercials in seven-day chunks, then sped the cassettes to his stations, which broadcast the tapes simultaneously in each local market. To feed his ersatz network, he ransacked the libraries of U.S. TV producers. He now has three such networks competing against two popular state-owned nationwide outlets. Since 1980, Berlusconi's ad revenues have soared 22-fold, to $1 billion in 1986. French TV is about where Italy's was ten years ago. Deregulation has sparked a raucous tussle for power and profit worthy of Dynasty. Surprisingly, it was the Socialist government that opened the door to private television. The Socialists handed out licenses for three over-the-air channels that began broadcasting in late 1984 and early 1986. They were Canal Plus, a movie service for which viewers pay a monthly fee; TV6, which showed mainly rock videos; and La 5, a general-entertainment channel owned principally by Berlusconi and Seydoux. The Socialists' handiwork collapsed when the Conservatives swept to power last March. Premier Jacques Chirac's allies accused President Francois Mitterrand of awarding TV licenses to his cronies, notably Seydoux, a Socialist and close friend of Mitterrand's. Chirac canceled the franchises for La 5 and TV6 and called for new applicants. A new board something like the U.S. Federal Communications Commission recently relicensed the stations. La 5 went to a new consortium that included Robert Hersant, right-wing publisher of the newspaper Le Figaro, along with Berlusconi and Seydoux. The winners of TV6 were Cie. Luxembourgeoise de Telediffusion, a Luxembourg-based radio and TV broadcaster with large audiences in Belgium and France; its partner, a French water utility called Lyonnaise des Eaux; and smaller investors. They have renamed the channel M 6 and broadened its format to include news. A more dramatic change looms. France will be the first country in Europe to sell a state-owned network. This year the government plans to privatize the most popular of France's three government networks, TF1. The new TV commission will choose a consortium to run the channel. Two groups have applied: publishing giant Hachette (which puts out Elle, among other titles) with a number of small partners, and Bouygues in partnership with Robert Maxwell and other investors. The front-runner isn't clear. Certainly Bouygues, founder and president of one of the world's largest construction companies, Bouygues SA, and a relentless cost cutter, would have a field day at the overstaffed TF1. FREE-MARKET FEVER is spreading. In Spain the government has promised to allow at least two private channels. Some of West Germany's 11 states may permit one or two over-the-air stations this year. The Belgian region of Flanders will grant a license this year for the first private Flemish station. Denmark plans to launch a state-owned channel partly supported by advertising. In Sweden and Norway legislators who can pull themselves away from pig vid are thinking of allowing advertising on state-owned channels. The explosion of commercial TV will accomplish more than making a few broadcasters wealthy. It could boost whole economies. TV advertising is the world's most powerful sales tool, but in the past European marketers who wanted to use it had to make do with the paltry air time doled out by state monopolies. Says Bochko Givadinovitch, the executive in charge of advertising sales for TF1: ''Companies would complain, 'If we can't advertise, we can't increase sales, and we can't hire.' '' Restrictions are still widespread. Advertising is banned on most over-the-air stations in Scandinavia, while the three state-owned German stations ban commercials in prime time and all day Sunday. Facing such restrained competition, the new private stations are attracting a horde of advertising dollars. According to projections by New York ad agency Saatchi & Saatchi Compton Worldwide, TV ad revenues in Europe will increase from $5 billion last year to nearly $7.5 billion by 1990 (TV ad spending in the U.S. last year: about $22 billion). The wide-open French market will be a banquet for advertisers. In the past, for example, cosmetics manufacturer L'Oreal never got as much air time as it wanted on TF1. This year, according to an advertising industry source, L'Oreal has purchased $15 million of air time, 50% more than last year. AS BROADCASTING flourishes, satellite TV is still struggling to fulfill its huge potential. In Europe satellites bounce signals to large dishes owned by cable operators, who then feed the signals to homes. Only 11 million of Europe's 127 million households are hooked up to cable, vs. 48% of U.S. households. Cable got off to a late start because of opposition from state TV monopolies. Today cable is growing briskly in some countries, slowly in others. Belgians and Dutch rely on cable TV to pick up over-the-air channels, since household antennas can't sort out the hodgepodge of signals buzzing in from neighboring countries. West Germany is rapidly being wired, thanks to lavish government subsidies. But in France the Conservatives have scotched the previous government's unwieldy, expensive plan for a vast fiber-optic network. More than 20 satellite-delivered services fight to attract cable viewers. They range from Premiere, a British movie service that charges viewers a monthly fee, to Ted Turner's Cable News Network, a 24-hour news operation available in 23,000 hotel rooms across Europe. All are losing money. Two of the biggest, Sky Channel and Super Channel, are headed for a major battle. Controlled by Rupert Murdoch's News International, Sky Channel is the pioneer. Founded in 1981, it reaches 8.5 million homes in 18 countries. Super Channel, owned by Britain's private regional broadcasters, began in January. A host of politicians and celebrities, including Prime Minister Margaret Thatcher, showed up at Super Channel's splashy inaugural cocktail party. The two channels have plenty in common. Both are London-based, general- entertainment services primarily in English, distributed through cable systems across Europe. Neither charges viewers a monthly fee; all revenue flows from advertising. Both channels hold down costs with inexpensive programming. Sky Channel carries a substantial amount of such U.S.-made fare as rock videos and ancient network series, among them I Dream of Jeannie and Batman. Super Channel is slightly higher-brow. It airs, among other shows, programs produced by the regional British stations and the British Broadcasting Corp. about a year after their original airing. This year Sky Channel will probably collect less than $20 million in ad revenues, Super Channel less than $10 million. Super Channel sells 30-second advertising slots in prime time for just $750, compared with $75,000 on Independent Television (ITV), the network the regional stations own in Britain. Sky Channel and Super Channel figure the losses are worth taking to establish themselves as the preeminent media for pan-European TV advertising. They may well be right. Pan-European advertising is ideal for companies such as Coca-Cola, McDonald's, and Mattel, which use the same brand name and packaging worldwide. McDonald's and Mattel are big advertisers on Sky Channel. Within a few years many struggling satellite channels could get a big boost from direct-broadcast satellites. These birds beam signals straight to homes, bypassing cable systems. Direct broadcasting by satellite (DBS) has not been a | big business so far because of regulatory restraint and because most satellites send a relatively weak signal, requiring big antennas to scoop it in. The dish can measure four to six feet in diameter and cost about $2,000 to $3,000. But direct-broadcast satellites in theory can send a signal ten times stronger, which can be picked up with a 20-inch plastic saucer on a roof or balcony. Governments and entrepreneurs are betting heavily on DBS. This year and next France and West Germany plan direct-broadcast satellite launches aboard the French Ariane rocket. Each satellite will carry four channels, and the slots will go to both private and state-owned stations. Sky Channel is considering leasing a spot on the French satellite, while Super Channel is still mulling the whole DBS question. ONE OF THE MOST ambitious ventures in European TV is British Satellite Broadcasting group, a consortium that includes, among others, Virgin Group, the record, retailing, and entertainment company; Granada Group, owner of an ITV channel in Manchester; and Amstrad, a maker of videocassette recorders, personal computers, and other consumer electronics. BSB wants to build a TV empire from soundstage to satellite: It plans to spend as much as $900 million over the next six years to buy at least two satellites, pay for launches, and buy programs. Scheduled to start broadcasting in 1990, the BSB satellite would carry four channels: a monthly fee movie station, a 24-hour news service, a children's channel, and a general-entertainment channel stocked largely with original programs.

BSB faces a stiff challenge from Astra, a Luxembourg-based project owned by several partners, including Deutsche Bank of Germany and Thames Television, the largest independent production company in Britain. Slated for launch in mid-1988, Astra's satellite isn't exactly direct broadcast. It beams a medium- power signal that requires a receiving dish 30 inches in diameter, bigger than the DBS dish but still small enough to set up in a garden. Astra's edge is that it will carry an array of 16 stations. Astra is strictly a satellite venture, which hopes to recoup its $180-million start-up costs by leasing slots to private broadcasters. British publisher Robert Maxwell is negotiating to lease three slots, including one for a lavish new entertainment channel to compete with Murdoch's Sky Channel. Boasts Maxwell: ''By 1990 I'll be way ahead of Rupert Murdoch.'' DBS could fly or flop on the price of dishes. Portenseigne SA, a French / subsidiary of Dutch consumer electronics giant Philips, is prepared to introduce dishes next year at $1,400 -- by most estimates way too high to attract a mass market. But prices should drop as volume increases. Amstrad Chairman Alan Sugar, who made his name turning out cut-rate stereos and videocassette recorders, claims that by 1990 he'll be selling DBS receiving equipment for $300. NO MATTER WHICH channels triumph, the fight is great news for program suppliers. As broadcasters proliferate, Europe is expected to need 473,000 hours of programs a year by 1990, more than twice the present volume. The big winner will be the U.S., which already supplies more than half of Europe's imported programming. Orders are pouring in. Lorimar Telepictures, producer of Dallas and other hits, sold France's TF1 160 episodes of Knots Landing last year for $7 million, or an average of $43,750 apiece. Says Michael Solomon, president of Lorimar Telepictures: ''Before competition, we would have sold the episodes for $25,000 apiece. It would have taken them six months to decide, and we would have had to pay the $12,000-an-hour dubbing costs.'' Last year Lorimar boosted European sales 40%, to $25 million. Walt Disney Co., which had never sold a movie to French television, last year licensed a package of 33 movies to Canal Plus for more than $5 million. European producers are fighting back with slick, expensive programs of their own. Berlusconi, Seydoux, Maxwell, and Munich film distributor Leo Kirch have formed a production company that will spend $18 million this year on four miniseries to be dubbed in several languages and shown across Europe. Berlusconi is shelling out $33 million to buy and revamp a sprawling studio and lot in Madrid. The new TV tycoons are taking over, creating a polyglot version of the cultural phenomenon invented, refined, praised, reviled, and devoured in the U.S. In Europe it will no doubt change the way viewers live. Advertisers will learn -- some better than others -- the astonishing effectiveness of heavy mass-TV advertising. On the tube or off, television in Europe is going to be a lot more fun to watch.