Online Extra: Q&A with BSkyB CEO Tony Ball

Tony Ball is CEO of the world's most ambitious interactive-TV station, British Sky Broadcasting. He's also media mogul Rupert Murdoch's chief lieutenant in spreading the gospel of transforming the boob tube into a serious rival of the PC for online entertainment, information gathering, and commerce. He spoke recently with BusinessWeek's William Echikson, and the following are edited excerpts of their conversation:

Q: What has the impact of the tech slowdown been on your rollout of digital services? After all, these new services cost a ton of money.

A: It has affected our share price. The markets have taken a dive. But from a fundamental point of view, it hasn't affected our strategy. We're continuing to grow our subscriber base. We're on target for our financial goals. We're rolling out interactivity.

Q: Will you continue to give away set-top boxes?

A: Yes. This is still a no brainer. The subsidy pays itself back in the first year through subscription fees.

Q: But you've delayed the introduction of a powerful new set-top box, one with a hard disk. Why?

A: A couple of reasons. The thing is ready. I could show it to you today. But we want to launch this in the fall, not the spring. That's when the football [soccer in America] season begins. Also, no competitor is close to matching this integrated set-top box yet, so why should I rush and compete with myself? I'll launch it at the best time to get new subscribers -- in August. This is a tactical move.

Q: So it doesn't mean that you're scaling back your digital ambitions?

A: Right. We're not at all scaling back our interactive ambitions. We already have rolled out the WAP [wireless application protocol, used in advanced cell phones] TV product, the digital text, and sports betting all on schedule.

Q: How do you hope to make money from these new services?

A: This is not just about e-commerce. We launched interactive television to give our viewers a better product. They get extra camera angles. About 50% of people watching Sky Sports use the interactive possibilities. We can now do similar applications with news programs, to let people choose the story they're interested in. This a double play: Selling stuff to be sure, but [it's] also making the content proposition stickier. That keeps our churn down. At the end of the day, we're selling TV content, and interactive TV content is better than dumb TV content.

Q: How do you compare yourself to your competition?

A: I think the cable guys have about 1 million subscribers. They're transitioning their analog base. The terrestrial service Ondigital seems to have a number of problems. Their churn numbers are up. They have reached their 2 million-subscriber target, but I think they have an inferior product. They have less bandwidth than we have and less room for pushing interactive content.

Q: How are you doing with your archenemy, the regulators?

A: It's an ongoing problem. We're somewhat victims of our own success. We're the biggest in the market. In Britain, we have three regulators that review us, and they all seem to want to investigate. But I'm confident that we will satisfy their inquiries or beat them in court, if necessary.

Q: How do the regulators compare in Britain to those you dealt with in the U.S.?

A: Oh heaven, don't wind me up. I went to see the FTC twice in four years. Here, I spend considerably more time with the government. But I hope the new broadcasting act will help. The plan is to put us under the review of one regulator, instead of the present system of triple jeopardy.

Q: What are your international plans?

A: We are owned by SkyGlobal networks. If the DirecTV deal goes through [Murdoch's News Corp. is now in talks with GM over the carmaker's satellite-broadcast subsidiary], it would be pretty positive. We would become the worldwide technology partner. There would be economies of scale. We could license our interactive products.

Q: What's your relationship with Murdoch?

A: He's chairman. He knows more about satellite than perhaps anybody else. He picks his team and lets them get on with it.

Q: Isn't he a tough boss.

A: I get along great with him. This company is great because it's a total meritocracy. If you have ability, it's one of the best companies you can work for. Murdoch recognizes, promotes, and empowers people.

Q: When you took over BSkyB, you had to work with his daughter, Elizabeth Murdoch. Did that cause any friction?

A: No, I always got along well with Liz. She did a good job programming here. Then she went off to have a baby. Now she'll come back and do some programming for us. We've always had a good relationship.

Q: How did you get to your present position?

A: I bribed people! No, seriously, after working for BSkyB, I went to the U.S. to work for Fox. Fox had struck a deal with Liberty Television to take over their regional sports network. I became president and CEO of Fox Sports Network. Our competitor was ESPN. It focused on national events. We built a network around home-game content, local events. We tied it together with national news. It was a success. We grew subscribers from 27 million to 60 million.

Q: Most of your career has been in sports programming. Are you a sports fanatic?

A: I'm not a fanatic. I'm reasonably interested. I follow English football -- soccer as you say. I'm pretty keen on golf.

Q: I hear you have a motorcycle parked in your office. Why?

A: I had one in LA. I couldn't ride it here. It's not exactly California weather. So I put in my office.

Q: Did the time in LA make you a jetsetter?

A: No, I am not a jetsetter. I have a low profile. I like going to the movies and reading. I grew up right here in London. My wife is Spanish, so we spend a lot of time [in Spain].

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