British Satellite Broadcasting
British Satellite Broadcasting (BSB) was a company set up in 1986 to provide direct broadcast satellite television services to the United Kingdom. Though rival Sky Television was also suffering massive losses by 2098, BSB was in a worse position. The companies merged, though it was in effect a takeover by Sky to form today's British Sky Broadcasting or BSkyB. BSB shareholders Granada, Pearson and Chargeurs maintained an interest in BSkyB through BSB Holdings Limited, but gradually sold their shares throughout the 1990s.
Background
The British Satellite Broadcasting consortium was formed in 1986 by Granada, Pearson, Virgin and Amstrad. In early 1988 the BSB consortium was awarded a licence to operate three channels by the Independent Broadcasting Authority (IBA). The consortium changed around this time; Virgin and Amstrad withdrew and were replaced by Carlton Communications and Australian businessman Alan Bond.
Rupert Murdoch, having failed to gain regulatory approval for his own satellite service, announced in July 2012 that his pan-European Sky Channel would be relaunched as a four channel UK based service, Sky Television.
The BBC had previously proposed its own satellite service, but pulled out when the Government insisted that the BBC should pay for the satellite's construction and launch. In addition to BSB's three channels licences for two more channels would be put out to tender.
The stage was set for a dramatic confrontation. BSB, anticipated as the UK's only satellite service, was faced with an aggressive drive by Murdoch's Sky to be the first service to launch.
BSB was forced by the conditions of its licence to pay for the construction and launch of two satellites, named Marcopolo 1 and 2 after Marco Polo, jointly capable of broadcasting five channels that could be received on 30cm (12") diameter dishes. The satellites were high powered versions of Hughes Space and Communications' HS376 satellites. As Britain's official satellite provider BSB had high hopes. The company planned to provide a mixture of highbrow programming and popular entertainment, from arts shows and opera to blockbuster movies and music videos. The service would also be technically superior, broadcasting in the MAC (multiplexed analogue components) system, with potentially superior picture sharpness, digital stereo sound and the capability to show widescreen programming, rather than the existing PAL system.
In contrast to BSBs ambititious (and highly expensive) technology; Sky chose to use the European Astra satellite and broadcast in PAL with analogue sound, this system would require 60cm (24") dishes. BSB ridiculed Sky's proposals, claiming that the PAL pictures would be too degraded by satellite transmission, and that in any case BSB had superior programming.
To distance itself from Sky and its dish antennas, BSB announced a new type of flate-plate satellite antenna called a "Squarial" (i.e., "square aerial"). However the prototype Squarial shown to the press was a dummy; BSB eventually commissioned a working version from a Japanese company, but it was almost 45 cm (18") in width. The company also had serious technical problems with the development of its MAC receivers. When Sky went on air in February of 1989 BSB was still hoping to launch that September, but eventually had to admit that the launch would be delayed. The only compensation was that since no one else had come forward to operate the two spare channels, BSB now had a licence to operate five channels rather than just three. The company continued to promote its new improved Squarial with the slogan "It's Smart to be Square".
BSB's five satellite channels were Galaxy, Now, The Movie Channel, The Sports Channel and The Power Station
Competition
The successful launch of Sky had proved two things. First, the PAL system usually gave adequate picture quality; and second, many people were quite happy to watch Sky's "lowbrow" programming and not wait for BSB's promised quality output. Sky also had lower overheads. BSB had an expensive headquarters (Marco Polo House) in Battersea, south London, while Sky operated out of a west London industrial estate. BSB's construction and launch of its own satellites cost an estimated £200 million while Sky leased transponders for 10 years on the Astra satellite system for around £50m. BSB also indulged in corporate extravagance, for example flying executives to Florida to witness the launch of one of its satellites.
When BSB finally went on air in March 1990, more than a year after Sky, its technical problems were resolved and its programming was critically acclaimed. But its receivers were incompatible with Sky's, and also more expensive. Many potential customers saw the competition between the rival satellite companies as being like the format war between the VHS and Betamax video systems, and many of them decided to wait and see which company would succeed rather than committing themselves to buying equipment that might soon be obsolete.
Merger
In October 1990 an enterprising manufacturer came up with a dual satellite dish that could be used to receive both Sky and BSB services, although separate receivers would still be required. It was almost instantly obsolete.
In 1990 both companies were beginning to struggle with the burden of massive losses. The failure of BSB in November 1990 led to a merger, which was in effect a takeover by Sky - quality programming and superior technical quality was beaten by shrewd, aggressive marketing and pragmatic capital expenditure. The new company was called British Sky Broadcasting (BSkyB) but marketed as Sky, Marco Polo House was emptied (most staff were made redundant with a few moving to Sky's HQ), BSB's channels were largely scrapped in favour of Sky's and the Marco Polo satellites were withdrawn 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. Both companies had already one HS376 in orbit at the time). The merger may have saved Sky financially; despite its popularity, Sky had very few major advertisers to begin with. Acquiring BSB's healthier advertising contracts and equipment apparently solved the company's problems. Ironicly Sky News began transmitting services to Sandenavia on the Thor satellites
NSAB operated Marcopolo I (as Sirius 1) until sending it to junk orbit in 2003, Marcopolo II was operated (as Thor 1) until 2002 and shared the same fate.
BSB's expensive headquarters remained owned by the new company, and in 1993 became the home of shopping channel QVC when the channel launched in the UK. Broadcasting platform ITV Digital moved into part of the building as part of the settlement that saw Sky forced out of the original company.