Satellite TV is a dying industry

In the UK, BSkyB (the provider of Satellite TV) has been dominant for so long that it's difficult to imagine anything else - rival cable companies Telewest and NTL have even neared bankruptcy and been forced to merge. And yet, I expect the roles to be reversed five years from now, because of the web.

Satellite TV is not compatible with the internet, because it's a broadcast technology - TV aerials can receive signals from satellites, but they can't transmit anything back. That makes it impossible to browse the web - how can the satellite know which webpage you want?

BSkyB has two assets - a TV content business, and a satellite distribution pipeline. Its business model has always been to ruthlessly leverage each asset against the other, purchasing football rights to encourage satellite uptake, and then promoting new content to this audience.

As content moves to the internet, BSkyB's business model will fail. It will be left with a legacy asset - the satellite distribution pipeline - that's no longer relevant. It will have to compete in the TV content business on an equal footing with its competitors. And it will have many new deep-pocketed competitors, including Apple and Google (via YouTube).

Rupert Murdoch is an incredible businessman but he will struggle against competition like this!