British Satellite Broadcasting plc (BSB) was a short-lived television company, based in London, that provided direct broadcast satellite television services to the United Kingdom. It started broadcasting on 25 March 1990. The company was merged with competing company Sky Television plc on 2 November 1990 to form British Sky Broadcasting.
In January 1977, the World Administrative Radio Conference assigned each country five high-powered direct broadcast by satellite channels for domestic use. In 1982, after being awarded two of the channels, the BBC proposed its own satellite service, but the government imposed two conditions on it:
Use of a satellite built by United Satellite, a consortium of British Aerospace and Matra Marconi Space (now Airbus Defense and Space), with costs estimated at £24 million per year.
A supplementary charter was agreed in May 1983 which allowed the BBC to borrow up to £225 million to cover the cost of the project, as it was not allowed to call on public funds, nor use existing sources of revenue to fund the project.
During Autumn 1983, the cost of Unisat was found to be greatly underestimated and the new Home Secretary announced the three remaining channels would be given to the Independent Broadcasting Authority (IBA) to allow the private sector to compete against the BBC in satellite broadcasting. Within a few months, the BBC started talking with the IBA about a joint project to help cover the cost. Subsequently, the government allowed the IBA to bring in private companies to help cover the costs (dubbed as the "Club of 21"):
Virgin/Thorn EMI/Granada TV Rental/Pearson Longman and Consolidated Satellite Broadcasting – 20%
Within a year, the consortium made it clear that the original launch date of 1986 would be delayed to 1989, while also asking the government to allow it to tender out the building of the new satellite system to help reduce cost. On 15 June 1985, the project failed when consortium concluded that the cost of set-up was not justifiable. The BBC stated the costs were prohibitive because the government insisted that the "Club of 21" should pay for the costs of constructing and launching a dedicated satellite.
On 2 April 1986, the IBA convinced the Home Secretary to revive the DBS project but under different conditions, broadly based on a report drawn up by John Jackson, by inviting the private-sector companies to apply for a new television franchise via satellite to provide a commercial service on the IBA's three DBS channels (of the five in total allocated to the United Kingdom). One of the conditions imposed on applicants by the IBA was that they use a new untried transmission standard, D-MAC. This was part of the European Communities' support for the HD-MAC high-definition television standard which was being developed by Philips and other European companies. The technology was still at the laboratory stage and was incompatible with previous standards: HD-MAC transmissions could not be received by existing television sets which used PAL or SECAM standards. The condition to use a high-power (230 watt) satellite was dropped, and no winner was precluded from buying a foreign satellite system.
The IBA received five major contenders with serious bids for the direct broadcast satellite franchises. It also received submissions from The Children's Channel and ITN to make sure their programmes were used on any successful bid:
British Satellite Broadcasting won the 15-year franchise on 11 December 1986 to operate the DBS system, with a licence to operate three channels. BSB forecast 400,000 homes would be equipped during its first year, but some doubts were cast as to whether this was possible. The Cable Authority welcomed the service, believing it would encourage more users, especially with its dedicated movie network. The original four satellite channels were:
Around the time of the licence award, Amstrad withdrew its backing, as they believed it was not possible to sell a satellite dish and D-MAC standard receiver for £250. Australian businessman Alan Bond joined the consortium along with Reed Elsevier, Chargeurs, Next and London Merchant Securities, amongst others. BSB earmarked the bulk of the first round of financing for buying and launching two satellites (for redundancy and provision of further channels later) and planned a second round close to the commencement of broadcasting operations. It commissioned the Hughes Aircraft Company to provide two high-powered satellites using launch vehicles from McDonnell Douglas (later United Launch Alliance). Both companies were American and had established reputations for reliability. Hughes was the main contractor and offered a commercial space industry first, "in-orbit delivery", in a contract signed on 6 August 1987. BSB's risk was reduced because payments became due only after the satellites were launched and operational.
On 8 June 1988, rival tycoon Rupert Murdoch – having failed to gain regulatory approval for his satellite service to become part of the BSB consortium – announced that his pan-European television station Sky Channel, would be relaunched as a four-channel, United Kingdom-based service called Sky Television, using the Astra system and broadcast in PAL with analogue sound. BSB had been aware of the impending launch of Astra when it submitted its proposal to the IBA in 1986 but had discounted it, partly on advice from the IBA that it would not have been possible for Sky to securely scramble an analogue PAL signal and a prediction that satisfactory reception from a medium-powered satellite such as Astra would not be possible with a dish of under 1.2 metres, which would require individual planning permission for each customer. Lazard Brothers, the Pearson subsidiary responsible for BSB's first fundraising memorandum, reportedly regarded Astra as technology-led rather than programming-led and, therefore, an unlikely threat.
The stage was set for a dramatic confrontation: BSB, expecting to be the United Kingdom's only satellite service, was faced with an aggressive drive by Murdoch's Sky to be the first service to launch. As Britain's official satellite television provider, BSB had high hopes as the company planned to provide a mixture of highbrow programming and popular entertainment, from arts and opera to blockbuster movies and music videos. The service would also be technically superior, broadcasting in the D-MAC (Multiplexed Analogue Components type D) system dictated by the European Union regulations with potentially superior picture sharpness, digital stereo sound, and the potential to show widescreen programming; rather than the existing PAL system. BSB claimed that Sky's PAL pictures would be too degraded by satellite transmission, and that in any case, BSB would broadcast superior programming. SES (later operators of the O3b data satellites and others with names including AMC, Ciel, NSS, QuetzSat, YahSat and SES, and formerly at that time, the Astra TV satellite operator), had no regulatory permission to broadcast, had plans (initially) for only one satellite with no backup, and the European satellite launch vehicle Ariane suffered repeated failures. However, SES used the resulting delay time to re-engineer the satellite to reduce the dish size needed, which would otherwise have been larger than 60 cm (24").
To distance itself from Sky and its dish antennas, BSB announced a new type of flat-plate satellite antenna called a "squarial" (i.e., "square aerial"). The illustrative model shown to the press was a dummy and BSB commissioned a working version under 45 cm (18") wide. A conventional dish of the same diameter was also available. The company had serious technical problems with the development of ITT's D-MAC silicon chips needed for its MAC receivers. BSB was still hoping to launch in September 1989 but eventually had to admit that the launch would be delayed. By 22 July 1988 in a bid to gain more viewers, BSB and the BBC prepared a bid for a four-year deal for the rights to broadcast top league football, outbidding ITV's £44 million offer. BSB had also committed about £400 million to tie up the film libraries of Paramount, Universal, Columbia and MGM/United Artists, with total up-front payments of about £85 million.