Satellite pay-TV operators in Europe have had a tough first quarter in terms of picking up new subscribers. In two of Europe’s biggest markets, Germany and the UK, both Premiere and BSkyB’s numbers were below expectations. With cable operators more competitive than they have been in the recent past, the pressure on satellite pay-TV operators is intensifying. However, during the past 12 months, most operators still have performed strongly and can feel satisfied with subscriber growth.

Germany

It was expected fully that having ended 2003 with more than 2.9 million subs Premiere could break through the 3 million barrier in the first quarter of 2004. However, the operator added less than 50,000 subs, which must be considered disappointing when you consider that in the final quarter of 2003 it added close to 150,000 subscribers. While the first quarter of the year is traditionally a slow one for pay-TV operators, the figures have somewhat slowed the momentum that Premiere had been building during recent months. Year-on-year, the operator has performed strongly and above expectations. It has added more than 315,000 subs since the end of March 2003 and now is in a far better position in the German pay-TV market.

UK

BSkyB, still Europe’s brightest light in satellite pay-TV, also had a very low key quarter. It added less than 70,000 subscribers which for BSkyB is low considering in the three previous quarters it added just under 500,000 subscribers. While BSkyB was anxious to point out that it was a seasonally weak quarter with a lack of marketing push, the results were perhaps the first sign of a real slowdown in subscriber growth. It was also the first time in recent memory that both cable operators, Telewest and NTL added more digital TV subscribers combined than BSkyB in a quarter. The two cable operators were good for 80,000-plus new digital subs in the first quarter.

BSkyB has a target of reaching 8 million subs by the end of 2005. This means the operator added an average of more than 100,000 new subscribers for the next seven quarters. It will be interesting to see whether BSkyB can increase its subscriber numbers in such a way. The operator has an impressive reputation for hitting targets, and at the same results announced that it had more than 320,000 customers for its Personal Video Recorder (PVR) offering, Sky+. It reached its target three months early. It also beat its target of 7 million subs earlier than expected. So, you would still say given its previous operational excellence that 8 million subs by the end of 2005 is in reach, but it is clearly not a given.

France

Elsewhere in Europe, the French market continued to show steady growth. TPS only releases its subscriber figures every six months so we have no figures here. But, Canal Satellite its rival added just under 50,000 subs in the first quarter. Year-on-year, the operator added more than 240,000 subs, an impressive performance. The French market is unusual in the fact it has two satellite pay-TV operations but both have strong balance sheets and both operators are also looking to ramp up their offerings in nascent TV over DSL market.

Italy

Sky Italia is growing at a terrific pace as News Corp. [NWS] works its magic there. In the last six months, the operator has added 300,000 subs and is growing at a healthy pace. It potentially could reach 3 million subs by the end of this year making Italy the fastest growing market for satellite pay-TV services in Europe’s major markets.

Spain

In Spain, Digital+ has still shed subscribers but the figures are a little misleading. While it has lost more than 80,000 subscribers in the last six months, it took on a lot of low fee paying Via Digital consumers (as part of the Canal Satellite Digital/Via Digital merger). With these contracts soon to run out, the second part of the year will give a much truer reflection of the growth the operator is having. Spain could become a significant growth market for satellite pay-TV in the next few months. Digital+ has spent a great deal on new marketing campaigns and with the Spanish cable operator, ONO also recently launching digital pay-TV services, the market could become more vibrant.

Nordics

In the Nordics, both Canal Digital and Viasat saw subscriber growth during the last 12 months. Here it would seem as though Canal Digital outpaced its rival by adding 65,000 subs between the end of March 2003 and 2004, where as Viasat added just more than 30,000 new subs. However, Viasat expects to receive a boost with the deployment of a new Conditional Access (CA) system. Viasat has had tremendous problems with piracy and it hopes its move to NDS will lead to boost in subscriber growth. The two operators combined have just more than 1.4 million subs in the Nordic region. — Mark Holmes