Sky Television Plc - BSB Competition and Merger

BSB Competition and Merger

The impetus for the relaunch as Sky Television was the refusal of the IBA to allow Murdoch to bid for the UK Satellite TV licence won by the British Satellite Broadcasting alliance. This created a battle to win customers in this new multichannel environment. In the end Sky's earlier launch and leasing of transponders on the Astra satellite network allowed it to merge with its rival. In contrast to Sky; BSB suffered from the regulatory burdens of only 5 TV channels, building and launching its own satellites and more ambitious and expensive technology. Also it had higher capital expenditure overall, such as the construction of its Marco Polo House HQ in London compared to Sky's industrial estate in Isleworth although this was not a decisive factor.

In 1990 both companies were beginning to struggle with the burden of massive losses and in November 1990 there was a 50:50 financial merger, with a management takeover by Sky. The new company was called British Sky Broadcasting (BSkyB) but marketed as Sky, Marco Polo House was sold, BSB's channels were largely scrapped in favour of Sky's and the Marcopolo satellites were run down and eventually sold in favour of the Astra system (Marcopolo I in December 1993 to NSAB of Sweden and Marcopolo II in July 1992 to Telenor of Norway, leaving the Squarial obsolete. Both companies had already one HS376 in orbit at the time). The merger may have saved Sky financially; Sky had very few major advertisers to begin with. Acquiring BSB's healthier advertising contracts and equipment apparently solved the company's problems.