British Digital Broadcasting on target for launch

8th May 1998

British Digital Broadcasting Plc (BDB), Britain's largest commercial digital terrestrial broadcaster, is on track to launch in the last quarter of this year.

  • BDB will breakeven at just under 2 million subscribers. It will make profits of more than £100 million with 3 million subscribers, and over £250 million with 5 million subscribers.
  • BDB and BT will work together to establish and manage a new, state of the art customer management centre.
  • BDB will use Divicom to supply its encoder and multiplexer equipment.
  • Research found that 12 million homes without multi-channel TV wish there were easier ways to get better choice.

Digital - The Inevitable Future

At BDB's first City presentation, Michael Green, Chairman of BDB and Chairman of Carlton Communications Plc, said:

"All television is going digital. The only real question is when. In the future, everyone will have digital television. All broadcasting will be in digital. And the Government will switch off the analogue signal. British Digital Broadcasting holds a unique position in digital television. It's a pay television platform, licensed by the Government for 24 years, and using a scarce national resource - the radio spectrum."

A Profitable Business

Stephen Grabiner, Chief Executive of BDB, said:

"BDB will breakeven at just under 2 million subscribers. It will make profits of more than £100 million with 3 million subscribers, and with 5 million subscribers that figure rises to £250 million. Fixed costs will be relatively modest. Most of our costs are variable, and depend on the number of subscribers."

BDB and BT to work together

BDB has selected BT as the key supplier for its new, state of the art customer management centre. BDB and BT will work together to establish this facility, which will be the cornerstone of BDB's customer service programme. Granada Technology, which has substantial experience at running customer call centres, will advise BDB in this process.

Stephen Grabiner, Chief Executive of BDB, said:

"Together, BDB and BT will bring a high quality, efficient service to BDB's customers. BT has the experience and skill BDB needs to deliver this - and their involvement opens other exciting commercial opportunities which we hope to explore. This announcement marks another important step for BDB - towards its launch in the last quarter of this year."

It was also announced that BDB will use Divicom to supply its encoder and multiplexer equipment. Divicom, based in California, is a world leader in statistical multiplexing. This means that BDB should be able to increase the number of channels and services soon after launch.

Consumers want BDB

Market research shows that 68 per cent of those who currently don't take pay TV wish there were easier ways of getting better choice. This represents a market potential of 12 million homes. This unfulfilled demand has arisen partly because:

  • 8 million homes do not want a satellite dish installed on their roof.
  • 7 million homes believe the current pay TV options are too expensive.
  • 13 million homes are not yet passed by cable.

A recent NOP poll found that 70 per cent of people interviewed are interested in Digital TV and that by far the greatest interest is in DTT. Those most interested in taking up digital were 5 times more likely to get DTT than satellite. This research also indicated up to 1 million people are prepared within the first year to pay £199 for a set-top box.

The best way to get the best of television

Stephen Grabiner said that BDB will focus on three key areas that viewers without pay TV want:

  • ease of access to get our new service;
  • quality of programming BDB will offer; and
  • our determination to provide value to our customers.

No dish, no cable - and no box wars

Stephen Grabiner explained the strength of BDB's technology:

"A simple plug-and play set-top box is all most people will need. No dish, no cable. Our most recent research - completed within the last month - has strongly endorsed our view that the simplicity and ease of installation will be one of its strongest points of appeal to consumers."

He said that he is confident there will be no box wars; and that BDB is committed to ensuring that consumers only need one box to receive digital terrestrial and digital satellite programme services.

Quality Programming

BDB will offer at least 15 channels at launch, from Britain's best known broadcasters - BBC/Flextech, Carlton, Granada and Sky. They will be packaged as 12 core channels, with one, two or three Premium channels from Sky.

Stephen Grabiner set out how the number of channels could increase thanks to technological progress:

"In a short number of years the 30 or so channels on offer at launch could increase by 50 per cent. There is also the prospect of introducing more interactive features and services."

Value for Money

BDB will offer viewers quality British programming with top sports and movies. Stephen Grabiner said:

"Our core package of 12 channels will be priced below the entry point of Sky's current big basic and, indeed, below the price points of many of the recently introduced cable mini-packages."

Digital Terrestrial Television will be the only way viewers will be able to watch all the free to air channels - including new free channels from the BBC and ITV in digital format. Digital ITV - Britain's most popular channel - will only be available on DTT. Viewers will also be able to receive digital Teletext and Ceefax, with enhanced graphics, photo-quality images and the look and feel of the Internet.

Driving Digital

BDB's marketing spend will be very significant in the period leading up to launch. It will also be heavily marketed in the High Street via retailers and manufacturers. Stephen Grabiner said:

"In addition, we have the support of all of Britain's major broadcasters who will be promoting the new digital terrestrial services on their free-to-air services. This in itself is worth about £100 million in advertising spend - that's more than some of Britain's biggest brands spend on TV advertising in any given year. And between them, BBC1, BBC2, ITV and Channels 4 and 5 reach over 95 per cent of the country in any week - so within one week of BDB's launch everyone in the country will know we are here."

Manufacturers' Support

Simon Turner, Managing Director of Philips UK, explained why his company is backing DTT:

"Philips believes that the birth of digital terrestrial TV will have a revolutionary impact as the names consumers know and trust - such as Granada and Carlton and especially the BBC - offer new choices. Our research, conducted before any publicity has started for digital terrestrial, indicates an immediate interest of 21 per cent of current non-satellite homes. This translates into 3.4m homes."

The Strength of Carlton and Granada

Charles Allen, Director of BDB and Chief Executive of Granada Group PLC, said:

"The launch of BDB gives Granada and Carlton an unparalleled market position in pay and free-to-air TV in the United Kingdom and in programme making. BDB's growth will be supported by the resources of two of the UK's largest media groups - providing programming and distribution capacity to support its growth. We look forward to a highly profitable future for it."

MPs Support Analogue Switch Off

British Digital Broadcasting Plc (BDB) welcomed the Culture, Media and Sport Committee's call for the analogue signal to be switched off no later than 2010, and that this date be announced before the end of 1998. This was one of the Committee's conclusions in its report, "The Multi-Media Revolution', published today.

Stephen Grabiner, Chief Executive of BDB, said:

"This is a welcome boost for Britain's broadcasters - including BDB - as we prepare to launch digital terrestrial television later this year. The Committee has seen sense: an early announcement of a date for analogue switch-off will allow consumers and the industry to plan ahead with confidence. Digital will bring massive benefits to Britain - more choice and new services for consumers, new business opportunities and new investment; We now look forward to working with the Committee and the Government to ensure the transition to the inevitable future of digital television is as smooth as possible"