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A Blisteringly Good Year For Europe
by Chris Forrester

We need to find a new word to describe Europe’s satellite progress over the past year. Looking back a year we described 2007 as “spectacular”, and in 2006 we said “action-packed”, while 2005 had been in our view “exciting”. But how do you top ‘spectacular’? The answer, as far as 2008’s trading is concerned, is that the year has been an amazing one for European satellite operators. They’ve made profits, added impressively to their fleets, maintained fill rates, and seen their all-important margins improve.

Moreover, the improvements extend to the wider family of operators to include players such as Arabsat and Nilesat, as well as the usual giants such as Intelsat, SES, and Eutelsat. Kurt Riegelman, now responsible as SVP Global Sales for Intelsat, jokes that his frequent-flyer miles to and from Europe are growing rapidly! Intelsat managed more than 25,000 hours of satellite capacity out of Beijing for the Olympic games, in both SD and HD. “A staggering amount,” said Riegelman.

Intelsat has also been contracted by the Major League Baseball Association to bring baseball into Europe, Latin America, and Asia, including coverage of the American League, the World Series and the World Baseball Classic in 2009. “There’s been some talk of MLBA launching their own dedicated channel, like the NHL, for example, but our role is simply to help them in distribution,” said Riegelman, who also stressed how well Intelsat’s partnership with Telenor at One Degree West works. “From the geographical location point of view it’s a fantastic slot. And we could not have a better partner than Telenor. Both PAS and Intelsat have been working with Telenor for years and years, but for us today it fulfils a multi-purpose role, not just for video but with different flavours of video including DTH, including cable and contribution services. We see Intelsat’s customers wanting to evolve, and they are asking us how they might get to a particular spot to serve multiple markets. And this is an excellent trend and where [there is] a giant footprint, the sort Telenor offers, is just what we want. We think we have a great project at One Degree West which will help our customers work through DTH, cable and broadcast.”

His comments are wholly endorsed by Telenor, which saw the Norwegian operator have an impressive year culminating with the launch of Thor-5 (Thor-6 is due for launch in the spring of 2009). Telenor’s broadcasting division reported “solid revenue growth” and stable margins helped by the addition of Thor-5. There was an impressive 22 percent growth in revenues on the firm’s Transmission and Encryption (Conax) divisions. “Based on the Thor 6 programme continuing to progress well, Thales Alenia Space estimates that delivery of the satellite will be within the contracted time frame of the second quarter of 2009. The next key stage will be reached in November, when we look forward to our launch service provider, Arianespace, defining the 30-day window for launch,” says Telenor.

Telenor’s latest client news reveals that they currently have 420 channels (on IPTV) now being carried throughout the region. Telenor has spent the last six months designing and developing its first IPTV network for Canal Digital and Telenor Telecom Solutions in the Nordic region.

But while 420 IPTV-based channels are impressive, the fact is that European satellite operators are carrying between them a massive 6,500 channels. The European Audiovisual Observatory used the giant MIPCOM programming market in Cannes to unveil its latest channel count for greater Europe (including Croatia and Turkey) and says that around 6,500 channels are currently available to EU audiences. Even though some channels are duplicated (Discovery, for example, is in most markets and each linguistic version is counted as a separate channel).

The study uses its ‘Mavise’ database to monitor numbers and currently identifies 5,068 active channels. The Observatory’s survey of local television channels is still ongoing: a further estimated 1,500 small local channels are active in European markets and will be progressively added to the database. Of the 5,068 channels identified in Mavise, 4,663 channels are established in one of the 27 EU countries, or in the two candidate countries (Croatia and Turkey), and 405 originate from third countries.

The Observatory’s analysis of the breakdown of channels (local channels excluded) according to country of establishment (Figure 1) shows that the U.K. is by far the country with the highest number of channels: 883 compared with 300 in Germany, 284 in Italy, 252 in France and 199 in Spain. The U.K.’s leading position can be explained not only by the large number of thematic channels intended for the national market but also by the considerable number of channels established in the U.K. and targeting other European countries.

The database diagram (See Figure 2) also allows a statistical analysis of the range of channels available by genre. Among the channels available in Europe in 2008, generalist channels offering a mixture of different programme genres still represent the largest category: 376 channels of this kind are available. Film channels represent the largest genre of thematic TV channels (333 channels), followed by sports channels (324 channels), entertainment channels (269 channels), and music channels (238 channels). There are also 201 news and business channels, 189 children’s channels, 135 documentary channels, 110 lifestyle channels, 103 home-shopping channels, 69 cultural/educational channels, and 26 travel channels on the market.

The two main European operators have also had a blisteringly good year. Luxembourg-based SES says it is now carrying 55 high-definition channels, and expects to have signed more up by the Christmas holiday. Indeed, SES president/CEO Romain Bausch delivered positive news at the end of October as far as Germany was concerned, where the analogue switch-off was now anticipated to happen in the 2010-2011 time frame, and where he saw a considerable uptake of HDTV-based services for Germany kicking in at about the same time.

Bausch also explained that talks were again scheduled with pay-TV broadcaster Premiere’s new News Corp. management team about future use of SES Astra’s ‘entavio’ digital TV system, which encourages free to air network broadcasters to encrypt their signals. “The situation is now much clearer at Premiere. We now have a clear interface at Premiere and hope to make progress over the next weeks and months. Importantly there is an increasing [level of] agreements between Germany’s public and private broadcasters regarding the switch-over to digital. It is clear that by the end of 2010 or during 2011 there will be the switch-over from analogue to digital, and in particular from the statements made by the public broadcasters there is a commitment to launch HDTV basically at the same time. This is a very good development.”

Bausch said that other initiatives were underway. There are now 10 satellites in SES’ launch procurement plan (and 11 if your include the planned Ground Spare referred to above). This plan includes Sirius-5, a new satellite for launch in 2011 with a total of 56 transponders (of which 36 will be utilised by Astra and 20 by SES subsidiary New Skies). As the launch manifest gets underway the net growth will see 293 incremental transponders added to the overall SES fleet, which represents a 28 percent increase over the 1,048 transponders active at December 31, 2007.

Indeed, it seems satellite operators can do no wrong as far as HDTV is concerned. Eutelsat has continually unveiled impressive revenue numbers, helped by increased demand for HDTV (it carries over 60 HD channels). The past year has seen a staggering 500+ (up 16.4 percent) new channels join one or other of Eutelsat’s growing slices of orbital real estate, and taking Eutelsat’s overall total more than 3180 channels (as at September 30).

HDTV capacity certainly saw significant gains, with CEO Giuliano Berretta saying that Eutelsat had more than doubled the number of HD channels it is now carrying compared to a year ago. Berretta talked about robust growth in a couple of specific regions: “With sustained demand across all our markets, both in European Union countries and in our ‘Second Continent’ of Russia, the Middle East and Africa, Eutelsat is confident of meeting its objective of more than €900m of revenue for fiscal year 2008-2009 and an objective of a compound average growth rate of 6percent for the period 2008-2011, accelerating during the period.”

Eutelsat was instrumental in breaking a world record for the first-ever international demonstration of Japan’s ‘Super Hi-Vision’ ultra-HDTV system in September at the giant IBC broadcasting convention. A few days ahead of IBC had seen Eutelsat awarded EuroConsult’s ‘Best Satellite Operator of 2008’ honour. Eutelsat used its Atlantic Bird 3 satellite as the connection for transmission between a play-out centre in Turin and the huge RAI exhibition centre in Amsterdam. Eutelsat and engineers from Italian pubcaster RAI had compressed the somewhat juicy signal of 24 Gbps to a more manageable 140 Mbps stream which still needed two full transponders using DVB-S2 to handle the bitrate.

Intelsat, SES, Eutelsat and Telenor are each important in their coverage, but as far as the Middle East is concerned Arabsat and Nilesat are the dominant players, and they too have had a spectacular year. Nilesat is chock-full, and has no real capacity of its own available. However, it is partnering with Eutelsat on some frequencies. It also has a new satellite, Nilesat-201, a Ku/Ka-band craft on order from Thales Alenia and for delivery around May 2010.

The other 12 regional operators broadcasting over the Middle East are also busy with a combined average fill rate of 73 percent, reports EuroConsult. The mid-2008 survey proves again that the Middle East is one of the world’s most dynamic for broadcasting. Transponder demand is rising at 12 percent per annum, with satellite-lease revenues growing by 17 percent per year on average since 2003, reaching $752 million in 2007, says Euroconsult.

However, Arabsat has also been writing large cheques, with a pair of RFPs out. Mohammed Youssif, CCO Arabsat, says that Arabsat, over the next three years or so will launch four new satellites, giving it the youngest fleet in the region, and more or less representing $1bn of investment from Arabsat’s telco partners. Youssif says he is buoyed by the sense of well-being in the sector.

“Everyone seems happy. Orders are back up, launch capacity is extremely busy, good demand for bandwidth, so overall and in general I see us enjoying a sellers’ market at the moment. In terms of Arabsat specifically, we have seen a huge surge in demand and we sense certain trends that are now visible in the region.”

Youssif said the trends revolved around four key areas: Ku-band, C-Band, HDTV and Ka-Band. “One clear trend is that there is plenty of demand for Ku-Band capacity. And this works out as far as we are concerned in a simple ratio where for every three Ku-band transponders sold we sell one C-Band transponder. Like others, we are seeing a great deal of demand for C-Band over Africa, and there’s plenty of talk about Ka-Band including the Middle East although maybe this still has a year or two before it translates into real demand.”

The Middle East is also now beginning to look toward high-definition. The ‘HD Ready’ sets are already in many people’s homes, but content is in short supply. This is seen as likely to change in 2009.
Two other major events are also expected to occur next year. First up is the launch of ‘Solaris Mobile’, a joint-venture satellite owned by Eutelsat and SES Astra. Solaris will launch in Q1/2009 and operate in the S-band, looking for DVB-SH traffic, or satellite pay-radio customers over Europe.

The second event is the launch of Hylas-1, the first craft to come from Avanti Communications. Built with the help of European Union cash the satellite will go to a mid-Atlantic position (at 33.5° W) later next year. Hylas-1 is already picking up very useful contracts especially in governmental broadband work.

2009 will present plenty of challenges for all our mentioned operators. There might even be further consolidation between players. But the thirst for new niche channels seems unquenchable. HDTV is coming on strong, and broadband by satellite — at long last — is making progress. We can anticipate more superlatives this time next year.

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.