Sky Beats Drums on Digital Launch

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Edinburgh, Scotland -- If there were ever any doubts about
digital TV arriving in Britain, they were dispelled here last week at the Edinburgh
International Television Festival.

No matter where attendees went, the message, "Digital
is coming," greeted them, and it was mostly coming from British Sky Broadcasting.

In a marked contrast to previous years at Britain's
most influential TV event of the year, Sky and its executives were represented in full
force at the EITF. For example, Mark Booth, Sky's chief executive, appeared on a
panel.

Elisabeth Murdoch, managing director of Sky Networks, also
gave one of the most high-profile addresses at the event -- her first important public
address since joining Sky.

Predictably, Murdoch touted digital as "the most
exhilarating, the most exciting and the most timely development since the medium was
created."

Booth spent a fair amount of time networking, and he could
even be seen holding court in the Sky-sponsored "Digital Café" to tout the
company's Sky Digital service.

A massive national advertising campaign by Sky also broke
during the festival, splashing Sky's launch message across newspaper spreads and
boasting highlights such as its pumped-up offering of 10 documentary channels and 11 movie
channels.

While's Sky's plans became more clear, those of
its potential competitor this fall, On Digital, seemed less certain than ever. On Digital
CEO Stephen Grabiner once again declined during an EITF panel to detail the company's
marketing plans, prices or launch date.

The 12-channel digital-terrestrial service is aiming to win
subscribers with a smaller, less expensive alternative to Sky's massive digital
slate. Grabiner said more details would be released later this month.

Sky itself is offering a small, entry-level tier called
"Value," which will allow subscribers to start at just £6.99 ($11.60) per
month, and to add specific, a la carte genre tiers after that, for £8.99 ($15) each. In
the new digital offer, Sky subscribers will have more subscription combinations to choose
from than in analog.

"That's actually something that we learned from
the cable industry," Booth said during an EITF panel.

On Digital's inability to have its marketing
proposition in place earlier this summer when it held a briefing, and again here last
week, has cast a negative shadow over the operation, observers said.

"He did not come off well," one U.K. channel head
grumbled of Grabiner's performance on the EITF panel.

Late in the panel session at the EITF, so many negative
questions and points had been raised about the prospects of On Digital that moderator
Anthony Fry, managing director of corporate and investment banking at Credit Suisse First
Boston, was prompted to bluntly ask Grabiner, "Why doesn't On Digital just pack
up its bags and go home?"

U.K. industry executives believe that On Digital will not
fully launch this fall, as it has promised, or that it will begin with a soft marketing
launch and not make a full sales push until next year.

This could provide Sky with enough of a competitive edge to
give it a jump-start during the important Christmas selling season. U.K. cable will not
launch digital services until next year.

Grabiner may have said more than everyone realized when he
stressed during the panel that the success of digital TV in Britain wouldn't be clear
anytime soon.

"Don't measure the success of On Digital, or
another digital service, by what happens this Christmas, or even next Christmas," he
said. "This is something that is actually going to take three to five years to
build."

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