|
U.K. faces digital TV war
|
 |
May 5, 1999: 5:00 a.m. ET
BSkyB offers free decoders to viewers, rival On Digital set to follow
|
LONDON (CNNfn) - Rupert Murdoch's BSkyB intensified competition in the fledgling U.K. digital TV market Wednesday with a plan to give away free set-top boxes to viewers.
BSkyB faces fierce competition from On Digital, another multi-channel venture received through conventional aerials or cable. On Digital said Wednesday it was considering a "range of marketing offers" which may include a free set-top box offer.
Analysts said BSkyB's bold move would help it maintain market share but would hit profits across the whole sector. "This raises the ante - the phony war is over," West LB Panmure media analyst Anthony de Larrinaga told Reuters. "The big question is 'Can they knock out the competition?'".
BSkyB is 40 percent owned by Murdoch's News Corp (NWS) and is one of the group's largest cash generators. BSkyB will take a 315 million pound ($507 million) charge in the fourth quarter to absorb the cost of the free boxes, which retail for around 200 pounds.
The company said it recorded 551,000 subscribers for its eight-month old digital service by May 3 and was on track to reach its target of 1 million by October. On Digital, which launched its service in mid-November, is owned by U.K. media giants Carlton Communications and Granada Group, and recorded 110,000 subscribers by the end of March.
BSkyB (BSY) shares rose 4.34 percent to 565 pence Wednesday, while Carlton (CCM) dropped 4.81 pence to 564 pence and Granada (GAA) slipped almost 2 percent to 1,346 pence.
The clear winner from Wednesday's tussle between digital TV providers was relative small fry Pace Micro Technology (PIC), which makes the set-top decoders. Its shares surged 10 percent to 165 pence.
BSkyB also said it will suspend dividend payments after announcing that the cost of launching digital TV resulted in a sharp fall in nine-month pretax profit to 69 million pounds from 203 million a year earlier. It said any excess capital would be returned through dividends or a possible share buyback.
The company will also take a 6 million pound charge against its failed bid for soccer giant Manchester United (MNU) which was blocked last month by U.K. regulators.
BSkyB's move comes just a week after chief executive Mark Booth resigned to head up Murdoch's Internet interests. No successor has been announced.
-- from staff and wire reports
|
|
|
|
|
|
BSkyB
On Digital
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
