BSkyB switches off analogue signal

LONDON - BSkyB is finally switching off its analogue signal tonight in a bullish move designed to encourage customers to switch to digital.

The move will leave around 100,000 customers with blank TV screens, except for the terrestrial channels they can receive through a normal TV aerial. It will also switch off a number of channels which have not yet signed up for carriage on Sky's digital platform.

The switch off has been well publicised by the broadcaster with a marketing and leaflet campaign, even though there is still a large number of analogue customers.

Sky, which has 5.5m subscribers, is understood to have incorporated the loss of the analogue customers into its profit forecasts. It is thought that the loss of subscription revenues will be offset by a reduction in transmission fees when the analogue signal stops.

However, last week Merrill Lynch downgraded its ebitda estimates by 9% for 2002 to £245m and by 12% for 2003 to £491m.

The investment bank raised its estimate for the number of analogue customers lost from 40,000 to 100,000.

The switch-off will be welcomed by rival digital broadcaster ITV Digital, which claims it is outselling BSkyB by two-to-one in the marketplace. The company says it will give them a chance to compare like with like and suggests that BSkyB's subscriber growth is slowing.

ITV Digital had 1.14m subscribers at the end of June, compared with BSkyB's 5.45m, of which 145,000 were analogue customers.

BSkyB hopes to attract 7m subscribers by 2003 and achieve average revenues per user of £400 by 2005. Shares in the company fell 0.3% to 615p in London this morning.

Meanwhile, the broadcaster has said it will continue to subsidise the cost of set-top boxes for the foreseeable future, putting further pressure on ITV Digital.

BSkyB began giving away its free mini-dish and digital set-top box two years ago. It had said it would begin to phase it out, which would allow ITV Digital to do the same.

ITV Digital shareholders Carlton and Granada have already spent £800m on the service. They are expected to have sink another £300m into it before it breaks even.

The companies are both suffering from falling share prices amid concerns about how much of their money ITV Digital is eating up on top of worries about declining TV ad revenues.

Carlton's share price was down 2.6% to 161.75p this morning, while Granada fell 2.9% to 100.75p.

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