BTBS Hopes For Further New Skies Collaboration

BT Broadcast Services (BTBS) expects to grow its overall revenues between 2 percent and 3 percent this year compared to 2002. The operator, a provider of terrestrial and satellite-based multimedia transmission products, has had a tough year but Managing Director Mark Smith believes things are starting to look up. He told SATELLITE NEWS: “There are indications that people are beginning to commit to bigger projects and longer term ideas for new content distribution. The last quarter of 2003 will really tell, but there are signs of a big turn up, not necessarily in the orders, but in terms of the optimism. There is definitely more confidence there is going to be business there.”

The operator is a major player in the satellite space and one of the leading providers of global broadcast products. It offers services to broadcasters, news agencies, special events organizers and large corporations.

Last year, BTBS hooked up with PanAmSat [Nasdaq: SPOT] to distribute video programming to PanAmSat’s customers via BT’s teleports and across its international fiber network. In addition, PanAmSat customers are also able to access a range of BT’s broadcast services and distribution platforms in Europe. BTBS also signed an occasional-use agreement with PanAmSat, enabling BTBS’ customers to use PanAmSat’s global fleet as a platform for major sporting event broadcasts.

BTBS works with a number of satellite operators in the area of content distribution, but could look to extend its collaborations with certain operators. Further collaboration with New Skies Satellites [NYSE: NSK] could be on the cards. “We are looking at what we should do with New Skies, but at the moment, we tend to use them as a capacity supplier because of their positioning and size. It is a little more difficult than the larger operators. I would hope we could increase the collaboration with them. If you look at what NSS is doing in terms of launching new satellites, they have got some quite exciting plans that they are talking about, which we think could be quite successful. We are talking to them in terms of what we are doing in the future,” noted Smith.

Sky Italia News

BTBS also hopes to sign more deals with European satellite pay-TV operators, particularly for its new SatNet product. It recently won a five-year contract from Sky Italia News to provide the multinational broadcaster with a mobile satellite network. Here, BTBS will be providing seven custom-built Mercedes Vito vehicles, each incorporating a BT SatNet mobile satellite unit. The key advantage of the system is that it enables rapid transmission of breaking news stories from remote locations, without the need for a studio or even an engineer.

Smith said this new product could lead to substantial revenues in the satellite arena. “We have got a whole list of deals planned in this area. If I were to tell you that the number of deals in this area runs into more than GBP30 million ($50.2 million) in the pipeline, that is the kind of size of business that is out there.”

He continued: “That GBP30 million is more than 5 percent of our annual revenues. For a new product to take over 5 percent of revenues of a business that has been around 25 years is pretty impressive. It is by far the fastest growing product that we have launched.”

Lack Of Momentum

Another area where the operator will be looking to make an impact is in high-definition TV (HDTV). While pay-TV operators in the United States are successfully running HD channels, HD has not had the same momentum in Europe. “We have a big role in actually driving HDTV to make the players understand that this is a very big value proposition for all of us here. I believe this is something the customer wants. BTBS is already playing a leading role in HDTV contribution services from Europe to London via satellite for onward transmission to the Japanese market. The U.S. will be next as penetration of HDTV sets increases, followed by Europe. We will roll out HD equipment in our truck fleet as demand increases, and will move into distribution via satellite for both cable head ends and DTH as customers begin broadcasting HD channels.”

It could be argued that HDTV in Europe is still slipping behind, but many industry leaders are confident that HDTV will soon have an impact. Ferdinand Kayser, SES Astra’s CEO, recently told SATELLITE NEWS’ sister publication Inside Digital TV: “We believe the time for HDTV is now coming, and we see it more or less from every European market and from the various actors in these markets. We have been approached by all of our major customers telling us they are contemplating HDTV within the next 12 to18 months.”

Smith is concerned it is still taking too much time. “I think 18 months could well be the time that the DTH [direct-to-home] players actually think about putting one or more HDTV channels on their platform. What is worrying is that another 18 months will put us 36 months behind. We are going to be three years trailing other people if we are not careful. It seems to me that there is no real reason for those platforms to wait. They should actually be now planning in terms of the content, sourcing it and starting to play out HDTV to prime that marketplace.”

According to Smith, HDTV on a satellite platform could see the light of day in Italy before a number of other major markets in Europe. “If you look at the UK market, Sky has been incredibly successful and the customer demand is more of what they are getting now. I think the customers in the UK are incredibly happy and don’t particularly want to change all that.”

He continued: “For European platforms, they are already quite a ways behind Sky in development. They are going through a lot of problems in financing the content they have got with the customer base they have got. There is lot more consciousness in Italy about the fact that Europe is being left behind and it would not surprise me if Italy started to leapfrog some of the other European countries.”

Looking to next year, Smith observed: “The biggest challenge we have is working with the content owners to actually get their content to newer devices than just dual classical vanilla DTH or classical terrestrial. What we are doing now with everyone we work with is looking at how you start to stream at different bit rates for things such as PDAs, mobile devices, PC or broadband. We are working with a lot of customers on new commercial models for how they make money out of their existing content.”

While BTBS has had an encouraging year in terms of revenues, Smith believes there could well be consolidation in the satellite industry over the next 12 months. “I think the satellite landscape is still going to suffer from overcapacity. There are more satellites going up. I don’t see how this can continue. I think there has got to be some kind of consolidation in that marketplace. There are just too many empty satellite transponders forcing prices down.”

–Mark Holmes

(Dan Winter, Band & Brown, e-mail: [email protected])