If You Want To Know The Future Of Television Then Look No Further Than The Announcements The UK’s BBC and ITV Made This Week; Going Are The Days Of Switching On The “Box” Just To See What’s On!

The BBC, the world’s oldest public service broadcaster, got the go-ahead to provide a new seven-day Internet catch-up service. The system allows viewers to “stack” an entire series for up to 30 days on their computer after the last episode has been broadcast. But be sure to watch everything within the next month because in 30 days the files all get automatically deleted from your computer!

The BBC’s service is at no charge. There had been a lot of mumbling by commercial content providers who didn’t like the idea of the BBC’s annual license fee (currently £135, $270, €205) being used to fund such Internet projects that they believe should remain solely in the realm of commercial vendors, but the BBC Trust received a lot of correspondence showing support and with just a couple of minor changes gave the go-ahead.

Strangely, one thought at first, Michael Grade, the ITV Managing Director and arch-rival to the BBC, voiced support of the approved BBC project. And then the next day Grade let loose his own bombshell, announcing ITV’s on-demand advertising-supported streaming and download service which includes access to archives going back to the 1950s.

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“ITV is a mass-market broadcaster and broadband is now a mass-market proposition,” Grade said. “Today we are combining the best of TV with the best of the Web to create a service unrivaled by any other broadcaster anywhere in the world,” he said. More than 50% of UK households have high-speed Internet connections, and the UK has the highest proportion of broadband-connected households in the world, he noted.

Incidentally, Grade’s last position before ITV poached him last November was as BBC Director General. He certainly knew what the corporation was up to, and most of their future plans too. Since he took over at ITV there has been a joint venture with the BBC announced to launch a new satellite-delivered free service of some 200 High Definition stations on the Freeview program and he did not fight the BBC’s on-demand service.

If one didn’t know better one might think that the BBC and ITV have decided that the real enemy here is not one another but rather BSkyB, the pay satellite broadcaster chaired by Rupert Murdoch, in which News Corp owns some 39%. BSkyB has caused tremendous programming problems for the BBC and ITV over the years by bidding huge amounts for sports that the terrestrial networks just could not compete against. Coming up with their own satellite system of 200 stations, all free-to-air in high definition, seems to send a resounding shot across BSkyB’s bow.

But as we have seen just this week with his Dow Jones (DJ) bid, Rupert Murdoch has very deep pockets and he is not afraid to spend money. It is the money spent on sports programming and movies that has made BSkyB the satellite pay TV leader it is and as long as BSkyB holds the rights to that programming the public clamors for the most then Sky will continue to do very well. Indeed, Murdoch’s son, James, runs BSkyB and he said that DJ bid has no effect on BSkyB investment plans.

The government likes what the BBC and ITV are planning for the Freeview satellite service. “The Government is keen to ensure that consumers have as wide a choice as possible of how they get digital TV. We welcome the plans being developed by the BBC and ITV for a free-to-view satellite service alongside Sky’s offering and we hope that the other public service broadcasters will join them in this endeavor. This promises to enhance further both consumer choice and competition in the television market,” the government said in a statement.

The On-Demand decisions by both BBC and ITV are truly invigorating, and both companies have every reason to believe they will be great successes. The independent Channel 4 set up its own on-demand system just last December and already the business plan is out of the window, so successful has that product been. And Channel 4 charges for its 4OD service – 99 pence ($1.98, €1.50) for each TV show and £1.99 ($3.98, €3) for movies. More than 1 million viewers have accessed the service, viewing 20 million programs.

In a speech this week Channel 4 Business Director Rod Henwood said that “On-demand services are now a television “mainstream requirement.” He said the days of just linear distribution are fast coming to an end. Video on demand is the “natural step” forward.

And for Channel 4 it comes just in time. The broadcaster, trying to remain competitive particularly against Sky, has spent huge amounts of money buying in American series (for Desperate Housewives it pays £975,000, [$1.95 million, €1.5 million] per episode.) It announced this week that Its linear advertising revenues in 2006 were down in a soft advertising climate by 5.6% (£39 million, $78 million, €60 million) but its digital revenue, including on-demand, grew by 46% (£43 million, $86 million, €65 million). Overall its profits were down two-thirds on the year before and it is making ugly noises that the government won’t like that it may have to cut back on its public service programming commitment.

Over at BSkyB, which has around 8.4 million subscribers, it’s not just satellite TV anymore it’s broadband Internet, too and its Q3 results announced this week showed it had doubled its broadband clients. The shares rose 7.8% – its biggest bounce in more than six years – and it has kept most of that during the week. Sky’s biggest problem now is churn -- it was 14% in the past quarter -- as it is trying hard to weed out the low paying customer by emphasizing better programming rather than discount pricing.

And not to be forgotten in all this is Virgin Media in which Sir Richard Branson is the largest shareholder. The blood between it and Sky couldn’t be much worse – Virgin has taken Sky to court because Sky withdrew some of its channel on Virgin’s cable system on pricing issues – and Branson had howled long and hard when Sky gobbled up 17.9% of ITV last November just about when Virgin was ready to make a bid for the whole company. The government is now deciding whether the Competition Authority should look at Sky’s ITV purchase.

If the Competition Authority were to decide Sky’s holding is anti-competitive and forced a sale, then the question becomes how that would be accomplished. Sky spent near to £1 billion, $2 billion, €1.5 billion) for its ITV holdings, paying 134 pence a share, around a 30% premium over the market price. The shares closed Thursday at 119.10 pence, so Sky currently is still down around 12.5%. Virgin is said to have “moved on” but one whisper in the markets is that RTL might be interested, but since it already owns Channel 5 might that cause competition concerns?

No matter, the face of television as we have known if for all our lives is changing, and changing very quickly.