Media: Middle classes, try my dish: David Elstein of BSkyB is trying to widen the appeal of 'council-house television'. He talks to Robin Hunt

DAVID ELSTEIN, director of programmes at BSkyB, bounces up and down in his neat office at Osterley, near Heathrow, reeling off statistics that underpin his bullish view of the future. His is the excitement only a former senior ITV executive, born again into the world of satellite pay television, can muster. He is preparing for the launch of a new subscription package of 16 channels on 1 September in a positive, almost evangelical mood - sure to be reflected by his boss, Rupert Murdoch, who will fly in from Los Angeles to throw the switch. 'The only way to find out if satellite television is going to work is to do it and see,' says Mr Elstein. 'Of course, there is an element of risk. That was one of the great attractions of coming to Sky - everything was a gamble. Launching in February 1989 was a gamble. Sky Sports on subscription was a gamble. The multi-channel package is a gamble, too.'

Not much of a gamble, one suspects, if Mr Elstein is involved. While deputy managing director of Thames, he produced a private blueprint for a subscription-driven football channel that Thames might have run on the Astra satellite. According to his calculations, the channel would have had start-up costs of pounds 7m and broken even in a year.

Mr Elstein believes that satellite television is now ready for its next two phases. First, it will lose the misleading tag of 'council-house television' - a phrase Mr Elstein himself used at the launch of Sky 1's autumn schedule and now says was exaggerated by the press. Second, the development of digital compression technologies will allow 150 channels to be available on a pay-to-view basis. Many of these will show premium films - a big film might be allocated to 50 channels, starting at 10-minute intervals, so that viewers can see a film almost whenever they want. There will also be Sky 2 and Sky 3. 'Really, there's no limit to what you can do,' Mr Elstein says.

As long, that is, as the medium continues to build its audience. 'Council- house television' was an exaggeration, perhaps, but it did reflect a prejudice among the middle-class viewers that BSkyB must attract.

This autumn, BSkyB's director of marketing and distribution, David Chance, will spend at least pounds 10m in an advertising campaign to emphasise the strengths of satellite. 'There are still around 80 per cent of households that don't have satellite,' Mr Chance says, 'and we will be supporting BSkyB with a massive press and television branding campaign to sell satellite to these people. It will emphasise the breadth of choice, which with multi-channel is now almost doubling the satellite proposition.'

When Sky was launched, it did appear to be aimed directly at the mass market; much of its programming was cheap and some of it cheerful - not so different from the parody in BBC 2's KYTV. Mini-series and fruitier versions of Blind Date were its most memorable fare.

Following dish installers around London at the time, I found that people had bought Sky out of resentment that the BBC and ITV were not as good as they had been. But even so, few of the early customers had positive things to say about Sky. The most popular channel at that time was the music station, MTV.

Much of the original hostility towards Sky was focused on Mr Murdoch's motives. There was talk of declining standards. The television audience would fragment, it was said, and a common television culture would disappear. Today, with BSkyB in profit and a recent Henley Centre report showing that middle-class viewers are increasingly disenchanted with terrestrial television, these arguments acquire an air of nostalgia.

The future, Mr Elstein believes, is ever greater choice. 'There is currently a lot of default viewing,' Mr Elstein says. 'People who have the four terrestrial channels often settle for the least worst programme. When they have 18 channels I expect their preferences will become very different.'

The impact of satellite television in the homes that have it is shown by official figures, which indicate that people with dishes watch satellite television more than any single terrestrial channel. Mr Elstein is sure the satellite base - around three million homes - will continue to grow. He scoffs at the Henley Centre's prediction of a ceiling on satellite viewing at around 12 per cent of all homes and total dish sales of around 4.5 million.

'I'd bet my own home against the Henley Centre,' he says. 'By 2000, it will be in at least 30 per cent of homes, perhaps 40 per cent. I can't see that in the next seven years there will be no more than 1.5 million additional dish sales. That figure could be passed within two years.'

Mr Elstein is keen to stress how commentators and analysts have got satellite television wrong. 'The image that Sky has is not borne out by the actual viewing patterns.' BSkyB's viewers are younger than any other network's, and thus less fixed in their viewing habits, he says; ITV has a more down-market and far older audience than Sky; and advertisers will learn to love BSkyB's audience as satellite penetration develops.

For the next generation of middle- aged, high-spending viewers, old ideas about a nation sitting down to watch, say, the Morecambe and Wise Christmas Show, simply won't exist. 'There will be such a range of choice that people will realise those ideas are anachronistic,' Mr Elstein says. 'This is the generation of multi- choice television. They know their way around the medium. The age of mass manipulation is over.'

Mr Elstein now has a much wider source of programming with which to woo a sceptical public. From September, the six channels on BSkyB (Sky 1, Sky News, Sky Sports, the Movie Channel, Sky Movies Plus and Movies Gold) will be augmented with new channels (see accompanying panel). But it will cost pounds 19.99 a month to take all three 'premium' services - nearly three times as much as a television licence.

'In a sense, we have been offering free sampling to satellite for the last four-and-a-half years,' Mr Elstein says, 'and it is possible that some people may not take up the offer, but so far the subscriptions look to be very healthy, and we have not started the advertising campaign yet.'

Last year the sports channel, with more than 100 live Premier League and international football matches, attracted 1.7 million subscribers. Competitors have said that the ratings for many of the games have been disastrous. But, Mr Elstein says, it is the act of subscribing rather than ratings that is important to a network for which advertising accounts for only 20 per cent of profits.

Television has become like a bookshop, he believes, where everyone can choose which books to buy. And just as publishers continue to produce books, so the future for television will be more and more channels, each seeking its particular audience.

Rupert Murdoch shows no signs of slowing his group's global expansion, recently acquiring a controlling stake in Star TV in Hong Kong. To him and Mr Elstein, at least, satellite television is a gamble that looks like a pretty safe bet.

PACKAGES DESIGNED TO TICKLE YOUR FANCY

The Sky multi-channel package consists of:

Sky One (entertainment); Nickelodeon (new children's channel); Bravo (nostalgia); Discovery (science and nature programmes); QVC - The Shopping Channel; UK Gold (old programmes); The Family Channel; The Children's Channel; Country Music Television; UK Living ('for women and their families'); Nick At Nite (more nostalgia); VH-1 (adult music).

The premium channels are:

Sky Movies; Sky Movies Plus; Sky Sports; Sky Movies Gold (free to anyone who subscribes to two other premium channels).

Subscribers who take the multi-channel package and no-premium channels will pay pounds 3.99 per month for an introductory period this autumn, then pounds 6.99. Those who take at least one premium channel will get the multi-channel package free. The cost of one premium channel is pounds 11.99, two cost pounds 16.99 and the full set of premium services, with the multi- channel package, is pounds 19.99.

For those who do not subscribe to any of the new services the following English-speaking channels will be available free and unscrambled on their Astra dish:

Sky News (may be scrambled in the future); Cable News Network (CNN); Eurosport; TNT (a new channel from Ted Turner, the owner of CNN); The Cartoon Network (also new from Turner); MTV (music aimed at youth, may be scrambled eventually); TV Asia (for Asian viewers in Europe). -----------------------------------------------------------------