Boxed in

BSkyB has purchased set-top manufacturer Amstrad in a £125 million (€171m) deal. Julian Clover assesses what might happen next

It should not be the company that causes the surprise, Amstrad had after all been a key player in the development of Sky Television, but more that BSkyB feels it necessary to get into the receiver business.

Many readers may recall the black and white photograph of News Corp chairman Rupert Murdoch and Amstrad founder Sir Alan Sugar ahead of the launch of Sky’s original four-channel service. Those now faded dishes helped feed many a hungry sparrow.

Almost 20 years later, the company that helped bring down the cost of Sky’s set-top box inventory, is about to do the same thing all over again. The numbers are straightforward: 70% of Amstrad’s revenues come from BSkyB – one assumes that Sky Italia contributes a healthy part of the rest – but as things stand only 30% of Sky receivers come from Amstrad.

The company currently provides the standard digibox and the Sky+ digital video recorder. But supplies of the Sky HD receiver have been delayed until the second half of the year.

The rest come from companies including Pace and Panasonic whose directors must be feeling uncomfortable even though their supply chain into the United States finally has all the links, and Thomson who had signed a first look deal on technology within News Corp. NDS, News Corp’s technology arm, has largely stayed clear of the consumer market, but it will have a ready made client that will keep it in royalties for some time to come.

Sky’s move is not unprecedented. In the United States, Echostar was a well-known manufacturer of satellite receivers before launching its own DiSH network. Echostar sub contracts some of its receiver inventory and Sky may well do the same, at least in the short term, using its newly found knowledge to further extend its well known negotiating skills.

It seems more than likely that Sky will look to increase the proportion of receivers supplied by Amstrad, though Sky would be unlikely to place all its eggs in one dish. So Pace and the others may have to worry a little, but maybe not too much.?