Case Analysis: BSB vs. Sky Television
How might BSB have been able to identify News Corporation as a potential competitor prior to Rubert Murdoch’s announcement of the launch of Sky Television? Reportedly BSB was taken by surprise with the announcement of the launch of Sky Television but there were numerous signs that pointed to News Corp’s possible entry into satellite television and, at the least, BSB should have been aware of the potential of a competitor to enter the market. BSB ignored one of the four important applications about exit and entry, “when planning for the future, the manager must account for an unknown competitor – the entrant.”
The major blunder made by BSB was the company’s dismissal of potential entrants. After Armstrad pulled out of BSB, the company made public their intention to remain in satellite television by stating in their annual report that, “as soon as the bureaucrats have sorted out the issues of standards, timings, and licenses, you will find Armstrad poised with low cost, high quality receiving equipment.” The company’s disappointment with the venture is clear as is their intention to remain in the industry. BSB should have kept a closer watch on Armstrad’s dealings which could have led to potential entrants, making BSB more prepared to respond to threats in the marketplace.
Despite the noted limitations of the launch of Astra, BSB should have recognized its ability to reduce the barriers to entry into satellite television by acquiring broadcast rights at a substantial discount. Without the D-MAC requirement imposed by the British government in the DBS along with Astra’s ability to lower overhead costs, News Corp’s barriers to entry were greatly reduced, something that should have been apparent to BSB. Even with Astra’s launch and Armsrad’s frustration, BSB failed to prepare for a competitor’s entry and more specifically, the launch of Sky Television.
News Corporation’s entry into satellite television was apparent...
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