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It Was 20 Years Ago Today...
by Chris Forrester, Columnist

On February 5th 1989, just 20 years ago, the Astra satellite made its first official transmissions. Astra’s major clients were led by an underfunded outfit called Sky Television, which had taken four transponders for its debut service. Other clients came from players such as MTV, CNN, and broadcasters in Germany, Scandinavia, and the Benelux. The Astra satellite had been launched on December 11, 1988, from Kourou, French Guiana, on an Ariane 4 rocket.

It was a massively uncertain time for all concerned. Finding the cash to launch the rocket fell upon Luxembourg, a tiny land-locked country. Luxembourg wanted its own satellite, but the plans for Luxsat had become mired in problems: the country’s biggest broadcaster CLT (now better known as broadcasting giant RTL) was partly controlled by a Belgian investor Albert Frere and he was unwilling to take the financial risk that owning a satellite required.

The technical opportunity was that, at this point in the early 1980s, Europe had no high-powered satellites. Secondly, the existing satellites used frequency spectrum called DBS (BSS) which were closely controlled by each country’s regulators, often closely aligned with the PTTs — most of which were state-owned. The satellites were each massively expensive and had more than their fair share of technical problems.

Eutelsat had been operating lower-power satellites since 1983, largely to satisfy its PTT clients and had carried entertainment broadcast services like the struggling ‘SuperChannel’ since January 1987.

The evolution of the major early satellite TV channels can be easily summarised. ‘Sky Channel’ had launched in April 1982 as a pan-European largely advertising supported channel. TEN (The Entertainment Network) launched in March 1984 but went bankrupt a year later, being re-launched as Robert Maxwell-owned Mirrorvision. Mirrorvision merged with U.K. movie channel Premiere in April 1986. Premiere closed in 1989. Sky Channel, despite News Corporation’s backing, struggled for commercial survival, as did ‘SuperChannel’, described as representing ‘the best of the UK’s BBC and ITV archive’. The prognosis was not good.

The Astra opportunity identified by Luxembourg’s then Prime Minister Pierre Werner and Candace Johnson, the wife of Luxembourg Ambassador Adrien Meisch, was to create a commercial satellite company, to buy and launch high-powered satellites and make TV channels from a wide variety of operators available to mass market audiences across Europe. Together they had the connections to get it done: Johnson’s father was the American son of General Johnny Johnson, who was the head of telecommunications for the American armed forces, and ran telecommunications policy in the White House under Presidents Johnson and Carter.

Johnson managed to find the not inconsiderable cash support the project needed from a number of sources, including the Luxembourg government, a few Luxembourg banks, and Count de Kergolay, a French aristocrat, who stumped up 10 percent of the required, initial US$100 million.

SES’s first president after incorporation was Pierre Meyrat, a former executive of Kirch Group, who would prove instrumental in convincing the German broadcaster to sign up to put channels on the company’s first satellite. Kirch Group signed up for three transponders for TeleClub, Premiere, and Sat1. However, once RTL president Goost Graas heard that Kirch had signed did RTL make a move — they signed at midnight to have several of their own channels on Astra.

The upstart satellite company got another important fillip when it signed Rupert Murdoch to four transponders for his fledgling Sky TV service in the U.K. The deal with Astra was one of keys to making Sky the winning operator over the direct-to-home proposition in the U.K., buying out its rival BSB in late 1989.

Listing this litany of facts doesn’t begin to tell the challenges of the entire story, of the political intrigue in Germany, France, and the U.K. over this new competitor to the cosy world of PTT-controlled satellites. Satellite also threatened to upset the world of cable, as well as formally licensed operators (such as British Satellite Broadcasting which was seriously endangered by ‘new boy’ Murdoch, and would be taken over by Sky in November 1990). The expenditure on satellite was truly ruinous for BSB, which lost almost £2bn ($3bn) during its short life.

Rupert Murdoch and News International, by buying Sky Channel and converting it into a four-channel service (it ought to have been five, but Disney didn’t join the service at first), created the largest group of channels in Europe.

Sky Channel was Europe’s first satellite TV channel, launched in April 1982. In 1983, News International bought 65 percent of its shares and, by 1988, owned 82 percent. In 1987, Sky increased its capitalisation by raising 22.63 million pounds, but its losses to that point in time (and subsequently) were substantial. By the end of its 1987-88 financial year, it had lost nearly 39 million pounds. That was bad, but by 1991, the losses were a massive 759 million pounds, on revenues of just 93 million pounds.

The following year revenues grew to 233 million pounds, but losses topped 188 million pounds. BSkyB eventually moved into profit during its 1994 trading year, which generated 550 million pounds in revenues and profits of 93 million pounds. Today’s figures are somewhat more healthy, and their 2007 trading year (to June 2008) realized revenues of 4.95 billion pounds, and operating profit of 752 million pounds.

Let’s get back to satellite and the arrival of Astra. In 1983, a somewhat percipient Luxembourg government had taken the bold decision to enter the ‘satellite age’. SES Astra’s early publicity extolled the Brussels-backed message of ‘Television Without Frontiers’, and encouraging entrepreneurship in a ‘new age’ of TV.

However, at the time of the Astra-1A launch, the potential market for existing direct-to-home (DTH) satellite reception was minuscule — no more than 113,880 installations across Europe. Although designed as a telecommunications rather than a broadcasting satellite, it was the vehicle that enabled many more viewers to access satellite TV with low-cost receiver boxes and small satellite dishes. Up to this point, viewers had needed dishes of at least 90 cm diameter (and ideally 1.2 metres) to obtain an acceptable screen image.

Naturally enough, Astra had to present its own forecasts to the financiers and in 1987 it suggested that by 1996 (thereby, 10 years hence), it would be reaching 20.2 million DTH and SMATV homes over Europe, and more again by cable. The reality was quite an improvement on the original forecasts, at 22.97 million homes, ahead of SES’s own estimate. Marcus Bicknell, who was SES’s first Marketing Director, and is now a main board director at SES, admitted that his forecasts had initially been perceived as optimistic, and confirms that they were based on the take-up and ownership of VCR’s in any given market.

Since those early days, Astra has grown in strength and diversity, and has pay and free-to-air television over Europe. Astra, or more correctly the Societe Europeenne des Satellites, now controls SES New Skies as well as SES Americom. Its European footprint includes 107 million viewing homes (via DTH, cable and SMATV). Europe now has about 6,000 TV channels. The U.K. is home to more than 861 channels (many being beamed into Europe and elsewhere). A huge industry has been created — and it all started 20 years ago.

About the author
London-based Chris Forrester is a well-known entertainment and broadcasting journalist. He reports on all aspects of the TV industry with special emphasis on content, the business of film, television and emerging technologies. This includes interactive multi-media and the growing importance of web-streamed and digitized content over all delivery platforms including cable, satellite and digital terrestrial TV as well as cellular and 3G mobile. Chris has been investigating, researching and reporting on the so-called ‘broadband explosion’ for 25 years.