Sky's new agenda plans to transform sporting life

IT is, as they say on the television, a whole new ball game and it gets under way in the early hours of Sunday morning when the second heavyweight world title fight between Frank Bruno and Mike Tyson is beamed live from Las Vegas to this part of the world.

Seven years ago Sky TV used the pair's first meeting to show that, in spite of the tiny customer base held by its newly born subscription sports channel, it was going to be a player to reckon with in the business over the coming years. Now it is sending another signal of what is to come.

While the company is saying that pay for view television is not set to become the norm it is clear that this weekend's presentation is merely the beginning of a new phase in Sky's bid to set the agenda for British and Irish broadcasting in the next century.

Sky successfully defied the conventional wisdom that people in Britain would not pay for a subscription sports channel when they first encoded Sky Sports in September 1992. This weekend it will try to break new ground again when it charges around £10 for access to a night of boxing that culminates with the Bruno Tyson bout.

While well established in the United States where these sort of ventures provide the financial backbone of sports promotion, this is a new departure in Britain (and Ireland where Cablelink is offering the same deal). Sky's claims that it will lose money on the tight are probably true, but the longer term potential to generate profits is obvious.

Already the largest generator of television subscription revenue in the world, Sky is making more than £4 million in profit per week at present with 85 per cent of all revenue drawn directly from the cheque books of its viewers.

Although the take up tends to be low for pay per view events in the US, where 8 per cent of potential households is the record, the market there is different because operators tend to install decoders in every house in order to make subscription a possibility.

That would make the American situation similar - though not identical - to Ireland, where Cablelink has already received orders for the fight from more than 1,000 of its 25,000 Sky Sports subscribers. In Britain interest is expected to be greater from the 3.5 million subscribers who already pay at least £190 to unscramble one or both sports channels.

With this fight, though, Sky is merely dipping its toe in the water. The revolution may stilt be some way off. Before Sky even embarks on its first pay per view venture its current analogue transmission system is about to become obsolete. But the company has already signed contracts to enable it to transmit more than 100 channels via three satellites, one of which has already been launched while overall, around 500 channels should become available to viewers here over the next couple of years. At that stage pay per view will be here to stay.

"The fact is that Sky's 10 year strategic plan is wholly based on pay per view of one type or another," says one British industry observer. "But, whether it's based on films or sport, the jury is very much out on how the public will take to the concept, particularly in the early stages."

Such is Rupert Murdoch's confidence in the idea, however that last week he formed a partnership with Germany's Bertlesmann Music Group (BMG) and Canal Plus of France to develop a pan European pay perview system based on the, as yet unready, German Seca decoder.

One concern for those banking on pay per view is that nobody has yet developed a digital decoder with the long term potential to deliver a top class range of services. However, a measure of the confidence among the major companies that the technology will be delivered to is the recent purchase by Telepiu (part owned by Silvio Berlusconi) of the encrypted rights to Italian first and second division matches over the next three years.

Public service broadcaster RAI lost out in an auction for the main rights to the Italian league to a £130 million three year bid from little known station Telemontecarlo, and Telepiu now plans to offer fans the chance to view, after the purchase of around £700 worth of equipment, any game of their choice for about £8. (Sky have repeatedly hinted that it hopes to introduce a similar system in Britain).

The two deals have prompted a discussion of footballer rights within the European parliament this week. The risk for Berlusconi is that failure to make the equipment commercially available within those three years will render a large part of the deal worthless.

"The problem is that a large part of the whole thing is supplier led," says Cablelink Marketing and Customer Services manager Paul O'Sullivan. "People aren't banging the door down for 1,000 channels and so it's a bit like talk about the Internet in that what happens is likely to depend on what can be done rather than what customers actually want."

For Mr O'Sullivan, Cablelink's decision to offer the fight was the correct one, because it did not want its subscribers to miss out on anything to which a dish owner had access. However some other cable operators, notably London based Videotron have decided to delay the move to pay per view until digital technology comes on stream.

"We've decided that it isn't appropriate for us to make the investment needed for us to carry the fight because we're not sure that it would be worth our while" says Benjamin Ball of the company's cable sector. "In the United States they have had pay per view for a long time and for most cable operators it is only worth about three per cent of turnover and we're not sure that it will ever happen here again. When it comes to digital, though, that will be an entirely different situation," he says.

In fact the extent of the changes brought about by digital technology is expected to be immense with viewers able to choose camera angles at events, watch several different angles, channels or replays simultaneously and call up seemingly endless amounts of background information and footage. However the challenge of generating such large amounts of data will be considerable for programme providers looking to fill the space available, while the technology may also frighten potential customers.

At Cablelink, Paul O'Sullivan expects the digital age to strengthen his company's position. Decoders will simply be offered to the current customer base on a similar basis to now. The company will then manipulate available services to suit its subscribers' technology, as with Sky Sports.

For Sky itself there is the difficulty of persuading many customers to buy new dishes over the next few years (or actually providing them free of charge). Simply providing enough programming is going to provide enormous logistical difficulties - not to mention worries over the quality of output.

The expectation is that the pan European service will involve about 20-30 distinct channels with other capacity devoted to pay per view sports and major films run on a staggered basis over many different channels.

For station operators the name of the game now is filling the schedule with marketable events. The growing appetite of subscribers, the advent of digital technology and prospective bidding war between cable networks is good news for those selling sports broadcasting rights. But, in the brave new world of pay for view television, the couch potato must now prepare to write those cheques.