Many Channels, No Clear Picture
The full effects of the move, from three or four channels in most countries to several hundred, have not sunk in for most viewers, since the vast majority have yet to experience the new technology. For now, broadcasters must bear the brunt of investing in the digital revolution.
This revolution holds enormous potential. By transmitting programmes on digital frequencies, broadcasters can squeeze many more channels into the same bands of frequencies. The most powerful satellite broadcasters will be able to transmit up to 500 channels from several satellites.
In time, that could bring huge revenue opportunities. The development of multi-channel cable in the US has reached the point where the traditional networks capture less than 50 per cent of the viewing audience and smaller, niche channels are able to take advertising revenue.
The most successful multi-channel broadcasters, such as British Sky Broadcasting, the company in which Rupert Murdochs News Corporation holds a 39 per cent stake, have already demonstrated the power of pay TV. BSkyB has shown that viewers are willing to pay for greater choice.
Yet the short-term impact of digital has been damaging for most of the broadcasters involved. BSkyB shares have dropped sharply this year because of concerns over the vast cost and risk of switching to digital, while satellite broadcasters in other countries face outright losses.
In the past year, there have been examples around the world of some of the most aggressive participants in television retreating in the face of digitals enormous costs. Digital satellite has, as yet, attracted few viewers and the initial technical and programme costs have been high.
In Germany, KirchGroup entered a partnership with CLT-Ufa, the Luxembourg-based broadcasting company in which Bertelsmann has a 50 per cent stake, after its DF-1 pay television service racked up large losses, contributing to the group having to seek refinancing.
In the US, Rupert Murdoch retreated from an initial attempt to strike up a partnership with Echostar, the satellite television broadcaster. Instead, he sold $1.1 billion of satellite interests