Dish of the day

They said it wouldn't fly. But what did they know, says the man who launched it. Sky TV is 10 years old today

The phone rang as I arrived home at around 11pm after another long, gruelling Saturday at The Sunday Times. It was Rupert Murdoch calling from New York. He was eager to know if the Astra satellite, due to be launched that night by a European Ariane rocket from French Guiana and from whose transponders Sky TV was to beam four new channels to Britain, had made it into orbit. The launch had already been postponed 24 hours because of bad weather and technical problems. He sounded worried.

I told him I expected to hear at any moment. He called back again an hour later. There was still nothing for me to report. He sounded uncharacteristically jittery.

"You sound a bit nervous," I said tentatively.

"Andrew," he replied quietly, "I'm betting the whole company on this."

Even when, a few hours later on that December night in 1988, the rocket carried Astra to its parking space in geostationary orbit, 22,300 miles above Earth ("Thank God," said a relieved Rupert when I reported the good news, "I'm going to pour myself a large drink"), and early test transmissions revealed perfect sound and vision, the conventional wisdom among the wise and the worthy in Britain's media village was that Murdoch was going to lose his shirt. Most relished the prospect.

I had jumped at the chance to play my part in bringing multi-channel choice to British TV when Rupert asked me to become executive chairman of Sky to oversee its launch, because I believed the viewer would be better served if the BBC/ITV duopoly were broken. Established broadcasters and media pundits thought we were on a profligate mission impossible.

They claimed, incorrectly, that the only reason multi-channel cable TV had taken off in America was because terrestrial reception was so bad. They argued, with typical establishment complacency, that the quality and variety of programmes on the existing British channels was so superb that nobody would be prepared to pay for extra channels, especially in a country where people already had to stump up for the compulsory licence fee. They predicted that, with Murdoch behind it, Sky would equal "trash TV". Their arguments look risible today. At the time, they created a poisonous atmosphere which made the Sky launch, already a daunting task given its unpreparedness (the place was a shambles when I arrived, two months prior to its debut), all the more difficult.

Michael Grade and the other panjandrums of BBC and ITV sneered at the very thought of satellite TV. Maggie Brown, then this newspaper's media correspondent, was always solicitous on the phone, but never failed to stick in the knife in print. Even the estimable Ray Snoddy, the doyen of media reporters, opined that we were trying to do too much too quickly - and likely to fail. I came to regard media journalists as lower than crime reporters: they were regularly less reliable.

Given this hostile climate, Rupert and I decided on a low-key launch. It had been a mad rush and we were not sure it would all work on the day. Even as guests turned up at Sky's headquarters (a grand title for three sheds in a muddy field in an industrial estate in west London) for the final countdown, workers were still painting, fixing wires and installing equipment. Some facilities were not ready and we had to hire trucks with the necessary editing and broadcasting equipment and hide them round the back of the buildings.

It was a wet, grey day and we had to lay down wooden boards to carry our guests over the mud - they were hardly grand enough to merit a red carpet: the political and broadcasting establishment had decided to shun the Sky launch. John Birt, then deputy director-general of the BBC, was the honourable exception: he turned up to wish us well. The Labour Party boycotted the event.

The only senior Tory to attend was Norman Tebbit and he was on the payroll (as co-presenter, along with Austin Mitchell, of the political debate show Target).

A few minutes before 6pm on 5 February 1989, Rupert and I stood on a platform in front of a collection of News International employees, a handful of well-wishers, and a posse of carping press praying for failure. I got rather carried away and began a New Year-style countdown; everybody joined in. As the last few seconds ticked away, I caught Rupert's eye. There was fear in both our faces: if nothing happened we were about to be destroyed by the whole non-Murdoch media.

But at precisely 6pm all four channels - Sky One, Sky News, Sky Movies and Eurosport - illuminated the terminals around us with clear, bright pictures and strong sound. "Welcome to the first day of the rest of your lives," said John O'Loan, the taciturn Aussie who headed the news operation, to his people in the Sky News gallery. It had taken Britain 60 years to get four national channels; we had doubled that number in under six months. A new era in British broadcasting had begun.

It was long after I had returned full time to The Sunday Times - and only after the spilling of much red ink - before Sky was perceived to be a success. Today it has over 6 million subscribers (almost 30 per cent of the UK's television-owning homes, which is close to US levels of penetration at the equivalent stage in multi-channel TV) and generates annual revenues of pounds 1.4bn, making it the most profitable satellite TV service in the world.

It has become a success by revolutionising the coverage of sport on TV, controlling the pay-TV rights to almost all of Hollywood's movie output and offering a choice and variety of channels - news, cartoons, documentaries, entertainment, history, wildlife - unimaginable 10 years ago. To the best public-service TV in the world has been grafted the widest choice of channels outside America. Both types of TV are flourishing (I always argued that Sky was an addition to established TV, not a replacement for it). The British viewer has never been better served.

So much for what the critics said a decade ago. They remain amazingly reluctant to admit just how wrong they were. In a churlish piece in London's Evening Standard on Wednesday, Jon Snow of Channel 4 News sneered that "Sky actually made very little of its content beyond the sport". Strange for a newsman to ignore the substantial output of Sky News, which broadcasts round the clock and is 90 per cent home-made.

Snow concedes that Sky News is "good, if safe" (now there's faint praise for you) but says that few ever watch it. As presenter of Channel 4 News, which has fewer viewers than any other terrestrial newscast, he should know about small audiences. But it is in the very nature of the 24-hour news channel that its audience at any one time is small; the weekly reach is in millions as people dip in and out, and its influence (because it is watched by the rest of the media and other decision-takers) is greater than the small ratings suggest.

For years British broadcasters talked about the need for a "third force" in broadcast news to supplement the BBC and ITN. Channels 4 and 5 have failed to provide it - they took the cheap way out by using ITN - while GMTV (like TV-AM before it) does not have the news resources to be taken seriously. Sky News is that elusive third force, a reliable, respectable addition to the broadcasting firmament which has taught the BBC and ITN a thing or two about covering breaking news. I am proud to have been involved in its start-up (and those in the BBC who enjoyed chuckling at its rough edges in the early days should tell us why, almost a decade after Sky News had shown them how to do it, they made such a hash of the launch of their own News 24 last year).

"Instead of breaking brave new television ground," continues Snow, Murdoch has been going round "breaking old sports grounds". I appreciate that the traditionalists have always had an affection for grimy terraces. But even allowing for the liberal left's nostalgia for the cloth cap, this is a bizarre way to describe the entirely beneficial effect on football of Sky money, which has transformed slum grounds into proper all-seater stadia and turned the English Premier division into the most prosperous in the world.

But Snow is right to attack Sky's failure to make its mark in British- produced soaps, sitcoms and dramas. This was the issue over which I fell out with Murdoch back in 1990, when I left Sky. I urged him to begin investing in original British programming for Sky One. A channel scheduled solely on US imports, no matter how good (and some are very good), will never be a huge ratings success, I argued. But Murdoch has nothing but contempt for British drama and comedy, and refused to invest in it.

Elisabeth Murdoch is now supposedly putting that right, but so far the results have not been encouraging. Home-made shows like Ibiza Uncovered could have been designed to prove the "trash TV" critics right all along. They belong more on late-Friday-night Channel 4 than on a TV service dedicated to popular, quality programming. But, like Home Box Office before it in America, Sky is getting into original film production, which is good news for the British film industry. If Sky One is ever to rival ITV or BBC1, it has no alternative but to make more British programmes.

The same voices who predicted that Sky would be a spectacular failure are now saying it will fall flat on its face as it goes digital. Certainly, Sky will never again enjoy the competitive advantage it had from having the balls to be first in the marketplace. Its expensive drive to digitise its existing subscribers and attract many more will cut profits from a peak of over pounds 300m to under half of that this year.

Those not noted for their financial nous have interpreted this as a clear sign that Sky is going to the dogs. In fact, all it means is that, once again, Murdoch is prepared to forgo short-term profits for the sake of long-term investment that is designed to reap huge future profits. British commentators are forever attacking the short-term horizons of British business; when Murdoch takes an appropriately long-term position, he is derided for it. How easily Murdoch discombobulates the brainless.

Though I have been persona non grata with Murdoch for four years and have no need to tout his case, my money is on Sky winning the digital race. Its main rival, ONdigital, may not be the expensive corporate lemon that BSB turned out to be when it took on Sky in the early days and lost; Gerry Robinson of Granada and Michael Green of Carlton, chairmen of ONdigital's major shareholders, are far more formidable businessmen than the numpties who ran BSB. But like BSB's before it, ONdigital's launch has been bedevilled by delays, technical problems and low take-up rates. As Sky powers past its initial targets for digital sign-ups, the presence of its rival in the marketplace is barely visible.

Henceforth Sky's strategy will be to increase penetration rather than maximise profits. The aim is to reach 10 million homes early in the next decade, which means the cost of subscribing will be capped or even cut. This will be costly, but the potential gains are enormous. To dominate the digital pay-TV market in over 50 per cent of British homes would turn Sky into an even bigger cash cow than it has been so far. Given their record for calling it wrongly, those who say Murdoch cannot succeed provide the most convincing reason for thinking that he can - and will.

Andrew Neil is editor-in-chief of `The Scotsman' and `Sunday Business'. He was executive chairman of Sky from 1988 to 1990