MEDIA FORUM: Is ITV's decision to air on Sky Digital the right one? Sky and ITV have finally kissed and made up. But just how important for advertisers is ITV's debut on Sky Digital? Alasdair Reid finds out

At last. ITV has joined the 21st century - the platform- agnostic,

interactive digital television century. Last week, the network signed a

momentous agreement with BSkyB, which will mean that both ITV1 and ITV2

will be carried on the Sky Digital platform. Not before time, you might

argue.



There's probably no greater measure of BSkyB's success in the digital

market than the anxiety advertisers have felt at ITV's continuing

absence from Sky Digital's electronic programme guide. The younger

demographic groups will grow up knowing nothing but digital multichannel

TV - and with all due respect to ITV's troubled rival platform, now

called ITV Digital, the vast majority of early adopters are Sky

customers.



Sky Digital customers could always get ITV, of course - but they needed

to flip out of the system and tune in to good old-fashioned analogue

terrestrial to do so. The feeling has long been that if you're not on

the EPG, then you might as well not exist. And you can't afford to play

hard to get in five million homes, now can you?



ITV has had its own agenda here. It wanted to withhold its programmes in

an attempt to persuade fans of the likes of Coronation Street to sign up

to ITV Digital. And after all, fans of Coronation Street are legion.



But the flaws in this strategy have become increasingly apparent.



So, a long-overdue victory for common sense? Street fans in Sky homes

have Janice and Les Battersby at their fingertips. Stuart Prebble, ITV's

chief executive, comments: "This is good news for satellite viewers, who

will be able to watch ITV1 and ITV2 through the Sky Digital EPG with

digital quality pictures and full programme information. It's also good

for ITV, which benefits from the 'digital dividend', which we receive

for encouraging digital viewing. Over time, ITV will also benefit from

revenues from interactive programming and advertising."



The digital dividend Prebble refers to is the Government's tax credit

scheme which gives broadcasters concessions depending on the number of

homes they reach digitally. Which, in these straightened times, is not

to be sniffed at. Prebble also points out that ITV2, in particular, gets

a huge boost to its potential audience and can continue its growth story

and begin to realise its potential.



A classic win-win deal? Mark Chippendale, Sky's deputy sales director,

says it will be interesting to see what happens to viewing patterns.

"ITV will do well. But if you look at the way people behave on digital

cable, I think we can expect a boost in viewing through the digital

handset - probably as much as a quarter more. And there is a benefit to

us of people using the platform more because, if you look at how

terrestrial channels do generally on the EPG, they tend to do far worse.

So there could be a direct effect for Sky 1. If there's more viewing on

the platform, Sky 1 will probably do pretty well."



Some observers believe that BSkyB will make other gains too. It won't

deliver a huge leap in Sky Digital subscriptions but it could help

persuade some households wavering at the margins. And while Sky has won

most of the early digital battles hands down, it will remain dreadfully

vulnerable in the long term if it fails to convince the homes (still the

majority) in which football is not a religion.



Chippendale isn't at all convinced by this argument - except perhaps in

areas where terrestrial reception is poor. He points out that it's

actually been ITV Digital that has been hammering on about its football

offerings - Sky's marketing proposition is far more broad-based these

days.



The general ad industry view, though, is that both sides are

winners.



However, Michael Winkler, the European media director of Gillette, a big

supporter of multichannel TV as well as the likes of ITV, says he's

concerned in the first instance with what this means for the network. He

states: "It's in no-one's interest in the advertising market to see

ITV's share of viewing keep falling. For each new household subscribing

to satellite, ITV was inevitably losing share - so being on Sky Digital

will limit its decline, even though ITV will never get the same share

that it would in a household that can only receive five channels. It's

essential for ITV to be on Sky Digital over the longer term."



Will it have any discernible short-term effect on the airtime

market?



Steve Platt, the managing director of Carlton Sales, says that the deal

will hopefully improve the network's share of viewing and boost

commercial impacts - though being on the digital platform could also

encourage zapping between channels.



Platt also believes that some people in media companies didn't fully

understand the complexities of the issues here. He comments: "Some of

them thought there were five million households out there that couldn't

watch ITV. That was never the case. For instance, a very large

percentage of people on the digital satellite platform still switched

out of it to watch the BBC. (Even though the BBC channels have been on

Sky Digital since the platform's early days.) But it is an issue that

has been worrying advertisers and from that point of view it's helpful -

they'll hopefully see this as a very positive development."



Mark Jarvis, the broadcast director of Carat, agrees: "It's all positive

as far as I'm concerned - and it was absolutely essential from ITV's

point of view that they did it. It will lift its commercial impacts by

maybe 3 to 4 per cent, which is modest but welcome, and it will also

increase its share of commercial audience. Given the pressure it has

been under, it's an essential move in the face of increasing

competition.



The real issue to me is why it has taken so long. It made the wrong

strategic decision three years ago and I think the false premise behind

that strategy has become increasingly apparent."



But what about the theory that being on Sky Digital could actually be

damaging to ITV viewing share? If you're a Sky household watching

Coronation Street on terrestrial, there's less temptation to go zapping

about on the digital platform (potentially finding something more

interesting) during the centre break. Now Sky viewers will do just

that.



Jarvis doesn't buy it: "If you look at analogue cable homes, ITV's share

has been higher than it has been in Sky Digital homes. If you pay for

something you will use it - that much is true - but while they might

look at more channels, it also becomes fiddly to come out of digital to

watch ITV on analogue. Not being on Sky was the greater risk for ITV."



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