The 2006 first quarter proved to be a tough one for European satellite pay-TV operators in terms of trying to grow their subscriber bases. Several of the operators have lost subscribers in the first three months of the year.

In our quarterly round up of satellite pay-TV operators in Europe, we examine the performance of satellite pay-TV operators on a country-by-basis and see how they are performing as competition from other TV providers intensifies.

United Kingdom

BSkyB had a relatively quiet quarter when compared the company’s usual standards. The operator added only 40,000 subscribers and ended the quarter with just a shade less than 8.1 million subscribers.

Despite the relatively lackluster subscriber growth, there is still much cause for optimism for BSkyB, as the operator is set to launch a number of new services in the remainder of 2006 as it looks to tighten its grip on the U.K. pay-TV market. The highlight is undoubtedly the launch of high-definition (HD) TV services. BSkyB’s HD offer already looks to be ahead of its U.K. competitors and growth already had been sharper than when it launched its Sky+ personal video recorder (PVR) service.

In terms of market dynamics in the United Kingdom, the last few months are seeing the emergence of unified communications brands. Cable operator ntl is hoping to benefit from moving to the Virgin brand for its quadruple-play offering. France Telecom also has announced it is unifying different businesses under the Orange brand and plans to launch an Internet Protocol (IP) TV service in the United Kingdom before the end of the year. BSkyB and telco BT also are set to launch IPTV services soon.

Germany

Germany has been a hotbed of activity in the digital TV market in the 2006 first quarter, and Premiere, the satellite pay-TV operator, is facing its toughest year in recent memory.

The operator lost the broadcast football rights for Germany’s Bundesliga soccer to Arena and coming to terms with this has been Premiere’s number one challenge. In terms of limiting expected subscriber loss, Premiere pulled off a coup by teaming up with Deutsche Telekom (DT) to cover the Bundesliga via IPTV. While this will limit Premiere’s subscriber churn, it will not eradicate it, and the operator already saw its subscriber numbers fall by about 45,000 in the 2006 first quarter.

The deal with DT also emphasizes the power that the telco is beginning to exert in the German digital television market. DT is building a state-of-the-art VDSL network and is teaming up with Microsoft to offer IPTV services. The deal with Premiere means it will gain a crucial edge in terms of screening premium content via IP.

The IPTV market is becoming increasingly competitive in Germany. While DT’s launch will be the most high profile, other telcos also are looking to get in on the act. Hansenet, which is owned by Telecom Italia (TI), launched an IPTV service prior to the start of the World Cup. Netcologne, which operates in the Cologne/Bonn region, also plans to launch an IPTV service in 2007.

So the pressure will be on Premiere throughout the year, and the first quarter slide is likely will continue, especially when the Bundesliga season starts in late summer.

Italy

Sky Italia continues to lead the way in terms of subscriber growth among European satellite pay-TV operators. In the past 12 months, Sky Italia added more than 500,000 subscribers and now has more than 3.7 million subscribers, making it the second largest satellite pay-TV operator in Europe.

Sky Italia also launched its HD service in Italy in May. The operator is working with Eutelsat and began leasing an additional Hot Bird transponder to provide the service, bringing Sky Italia’s total capacity on Hot Bird satellites to 18 transponders. Pace Micro Technology is supplying HD set-top-boxes to Sky Italia.

Spain

Digital+ rapidly is becoming one of the success stories in the European satellite pay-TV arena. The Spanish operator is closing in on 2 million subscribers, adding nearly to 300,000 subscribers throughout the last 12 months, ranking third behind BSkyB and Sky Italia.

The IPTV threat also is growing in Spain, with leading telco Telefonica beginning to flex its muscles here. The telco ended 2005 with 250,000 IPTV customers and is targeting 500,000 subscribers by the end of 2006.

France

The French satellite pay-TV platforms Canalsat and TPS, which are in the process of merging, did not release their latest subscriber figures for the latest quarter. The combined company will have a subscriber base of about 4.5 million. As the companies combine their operations in order to compete more effectively in the French market, they are actively pushing their HD services in an effort to compete with a growing IPTV market in France.

Eutelsat is taking part in an HDTV terrestrial trial in France, partnering with TDF to transmit a sequence of programs in HDTV MPEG-4 to digital terrestrial TV transmitters in France’s three largest cities. The satellite channel provided by Eutelsat will deliver HDTV programs supplied by leading French channels including France T�l�visions, TF1, M6 and Canal Plus to transmitters in Paris, Marseilles and Lyon.

Portugal

TV Cabo is seeing zero growth in terms of direct-to-home subscribers. Having reached the 400,000-subscriber milestone in March 2005, the operator has lost ground since, falling to 381,000 subscribers at the end of the 2006 first quarter.

Nordic Region

Satellite pay-TV operators Canal Digital and Viasat have nearly 1.8 million subscribers across the Nordic region and both operators saw solid, if not spectacular growth in first quarter, adding more than 200,000 subscribers throughout the last 12 months. Viasat has performed very strongly throughout the last year and now has nearly double the subscribes of Canal Digital

–Mark Holmes