The arrival of digital TV in the UK has been a triumph for Sky.
Even the success of BBC-backed digital terrestrial platform Freeview and a slowdown in new SkyDigital subscribers can't disguise the grip that Rupert Murdoch's aggressive satellite platform has on UK pay TV.
But digital hasn't been good news for BSkyB entertainment channel Sky One. With its audience share now about half what it was in the mid-90s, BSkyB plans to give Sky One the branding equivalent of Nip/Tuck surgery.
Prior to the launch of digital, when there were fewer slots for channels, Sky One carved out a strong position by acquiring the exclusive pay TV rights to US shows such as Friends and The X-Files. But the launch of Channel 4 digital spin-off E4 put an end to that.
By acquiring rights to shows such as Friends, Frasier, Sex in the City and ER across free and pay TV, C4/E4 forced Sky One to adjust its proposition.
Sky One's response was to plough resources into productions such as Ibiza Uncovered and Dream Team. While these drew plaudits, Sky One has not generated returns to justify its commitment to UK content. Problems became apparent last year when Sky Networks managing director Dawn Airey replaced Sara Ramsden as Sky One's editorial chief with James Baker.
ITV2's emphasis on brand extensions - Pop Idol - and BBC3's access to comic talent - Little Britain - has cut Sky One's share in multichannel homes from 4%-5% in the mid-90s to 2%-3% now.
It has also had to battle thematic channels such as Living and MTV, which are broadening their base with shows such as Will & Grace and The Osbournes.
Getting the balance right
So what can it do? ZenithOptimedia head of broadcast Chris Hayward says Sky One is important to advertisers as it balances the male audiences delivered by Sky movie and sports channels by attracting younger, female viewers.
But he believes it has become over-reliant on a few big series. 'Nip/Tuck, 24 and The Simpsons are key shows, but that doesn't provide much depth in the schedule. It needs to acquire more headline shows and be more creative with scheduling,' he says.
While acknowledging the impact of terrestrial-backed competition, a Sky One spokesman says the network is still ahead of its rivals. He argues that the line-up is not as thin as critics claim. Aside from the flagship brands, there's Jake 2.0, Cold Case, Malcolm in the Middle and domestic hits such as There's Something about Miriam and the recent Rebecca Loos interview. There are also unconfirmed reports that Sky One is set to scoop a batch of strong shows from HBO.
He adds that decline in share is primarily a result of its decision not to go on Freeview, which is now in almost 3m homes. If you focus on SkyDigital homes and add in Sky One sister compilation channel Sky One Mix, Sky One's share has held steady at 3.8% for a year. For the Loos broadcast, it grabbed an impressive 17% share of SkyDigital homes.
Sky One's search for a branding agency suggests the channel's personality is cause for concern. Bruce Dunlop, founder of Bruce Dunlop Associates, rebranded ITV2. He sums up the view of many observers when he says that Sky One has lost its way: 'It has a neat design, but lacks attitude.'
Dunlop believes any rebranding will be influenced by some strategic choices.
'A lot depends on whether management regards Sky One as a standalone channel or as part of a broad-based strategy to drive subscribers to the platform. They also need to decide how it fits into the new world of PVRs.'
Dunlop believes the Heat-style approach typified by the Loos interview gives a clue as to where the channel may head. 'It is light on its feet and moves fast in response to breaking events. That's where I'd look for an identity.'
Assuming Sky One finds an identity, would it make much difference? Dan Brooke, managing director of 4Channels at Channel 4, is responsible for making E4 one of the most distinctive brands in pay TV. He says there's a clear link between programme spend and share, but stresses that branding makes a difference. 'Digital is so competitive that shows, scheduling, visual identity, branding and advertising all have to pull their weight.'
Of course, it's easy to underestimate BSkyB. While it may not be able to cross-promote Sky One with free-to-air networks, it has help from News International newspapers. With a 拢483m operating profit for the nine months ending March 31, BSkyB is not short of cash if it decides to pursue the obvious solution to Sky One's problem - the purchase of RTL-backed Five.
By buying Five, BSkyB could hoover up sport, movie and US comedy rights then cross-promote in a way that boosts both ad revenue and digital subscription.
In such a scenario, Sky One's troubles would soon be a distant memory.
DATA FILE
Share of viewing in Sky Digital homes
2004 (%) 2003 (%)
Sky One (including Mix) 3.78 4.03
Five 3.77 3.43
UK Gold (including time-shift channel) 2.37 1.84
Living (including time-shift channel) 1.61 1.18
ITV2 1.30 1.03
E4 (including time-shift channel) 1.13 1.29
BBC3 0.49 0.41
Source: BARB