Britain’s Second Satellite TV Service Will Debut : Communications: The new outfit is taking on a company owned by Rupert Murdoch. The winning firm may be the one willing to lose the most money.

At the stroke of 6 p.m. on Sunday, British Satellite Broadcasting will launch a $2.1-billion television programming service that will give Britain five new national channels, advance the state of TV technology by a couple of notches and threaten competitor Rupert Murdoch’s dream of a satellite television empire.

Premiere night viewers will first see a program about the company’s operations called “Around BSB in 80 Minutes.” Then its five themed channels--all transmitted from the company’s own satellite--will split off in separate directions. Subscribers will have their choice of the Movie Channel, which will debut with the James Bond film “The Living Daylights;” the Sports Channel; Galaxy, a general entertainment channel; Now--The Channel for Living, which will provide information and arts programming, and Power Station, BSB’s answer to MTV.

The grandiose debut is marred only by the fact that fewer than 500 households in Britain have the special reception kits needed to pick up BSB’s satellite transmission.

Even when coupled with the estimated 300,000 homes capable of receiving BSB through cable television, the viewership remains at an extremely modest level that makes the launch mostly symbolic.

It’s not that no one is interested. More than 40,000 people paid a $16.50 deposit to join a “Launch Club” that would supposedly give them first crack at BSB receiving equipment. They’re still waiting.

The problem is that manufacturing setbacks have created such a severe shortage of reception kits that there do not appear to be enough even to supply demonstration models for all the country’s retail showrooms.

“I’ve got one,” quips John Gau, the company’s optimistic chief programmer. But he admits, “We certainly have a slight temporary glitch. We’ll have a month of glitches.”

He believes that the equipment will become widely available by late May or June. From that point, according to the company’s internal financial forecasts, BSB will have to pick up 3 million subscribers in three years to break even. That means one of every seven of Britain’s 21 million television households.

“Obviously, that’s quite a tough call but not impossible,” says Gau, a veteran of the BBC.

A consortium of investors led by Granada TV, entertainment and media giant Pearson, Reed International, the French communications group Chargeurs and Bond Corp. of Australia are betting heavily that it will work, but the obstacles are formidable.

Most noticeably blocking the path to riches for BSB is Murdoch’s rival Sky Television, which already beams four channels--news, sports, general entertainment and a subscription movie service--across the country. Besides persuading consumers that they should invest in satellite TV in general, BSB must persuade them to choose its channels over Murdoch’s.

That won’t be easy. Sky, operating for more than a year, claims to reach 720,000 dishes in the UK and Ireland. “We feel we have an important lead over them,” says Fiona Waters, director of publicity for Sky.

The big lead is significant not only for the early momentum it has given Sky but because of the incompatibility of the rival satellite transmissions. Each system has its own receiving dish that cannot pick up the other’s signals. With a minimum outlay of several hundred dollars required to buy the cheapest dish, overlapping is expected to be minimal.

The BSB equipment, which transmits on a technologically advanced D-Mac standard, will provide better quality pictures and is likely to offer additional features down the road because of its high power and ability to address individual receivers.

And BSB also is quick to point out that its range of dishes--the most publicized being a flat, square device nicknamed the “Squarial”--are smaller and less obtrusive than the Sky dish. Reports of neighborhood squabbles over the alleged unsightliness of the Sky dish are not unusual.

But Sky, which transmits on the European standard PAL, has its equipment priced at least $150 less than BSB’s--just over $400 for a unit with remote control, compared to an average $575 for BSB. It remains to be seen how many people will pay extra for a marginally sharper picture.

Ultimately, the satellite battle of Britain will probably be decided by programming. If there’s something viewers want to watch, they’ll get it.

BSB seems confident that it has the overall formula and the individual hit shows. The company has gone to tremendous lengths to push the notion that it alone will be the British satellite system, a sort of BBC from outer space. At the same time, BSB has tried to portray Sky as an Australian-American invader that befouls the airwaves with mindless game shows, professional wrestling and car chase movies.

While Sky’s entertainment programming does contain a healthy share of cheap American reruns and has been soundly criticized by the press, its Sky News has received high marks. In addition to offering its news channel and Sky One, the general entertainment channel, Murdoch’s enterprise also includes Eurosport, which is beamed across Europe, and Sky Movies, a pay subscription service.

For its programming, BSB also has included some American retreads but appears to be reaching for a certain level of sophistication. Among the U.S. shows set to air are “Hill Street Blues,” “St. Elsewhere” and “China Beach”--along with “The Young and the Restless.”

But much of the programming will be new shows commissioned from British production companies or reruns of British hits.

“They’ve bought a lot of the classic BBC shows,” says Graham Wilde, an executive at CIT Research in London, which studies the telecommunications industry. “I think that’s significant. People prefer to watch programs that are based in their own countries.”

The most intense fighting between BSB and Sky is expected to come over their movie channels. Sky Movies and BSB’s Movie Channel, which both charge about $15 monthly, will bring each company about 70% of its revenue for now, according to CIT. Advertising income is expected to be minimal.

With Hollywood at the core of both movie channels, Sky has struck exclusive British pay-TV deals with 20th Century Fox, which Murdoch owns, and Disney’s Touchstone. BSB has exclusive rights to 2,500 films from Paramount, Universal, Columbia, MGM/UA, Orion and Warner Bros.

“I think they’ve both put together attractive movie packages,” says CIT’s Wilde. With BSB finally debuting, the satellite contest may ultimately rest on which company is willing--or able--to lose the most money for the longest time. Sky officials said they are losing a whopping $3.3 million a week, but Murdoch has stated publicly he will stay in the game for at least five years.

BSB’s backers also are investing the kind of money that would suggest that they will wait out rough times. BSB will spend $363 million on programming during its first year of operation. Another $330 million will be spent over the next three years on marketing and promotion aimed at grabbing those viewers who may sign up eventually but need “an extra push” to do it right away.

While no one can predict whether one or both satellite services will survive, one scenario is that both companies will find it too difficult to continue after spending such vast amounts of money, says CIT’s Wilde. “It’s difficult to see how they’re ever going to recoup that money,” he says.

Jeremy Mayhew, a media analyst with Booz, Allen & Hamilton in London, envisions another possible outcome that would hinge on cable television.

Although the British cable industry is in its infancy, it could see explosive growth over the next few years. If that happens, Mayhew says, “there is room for two significant program suppliers.”

Meanwhile, Sky and BSB will battle for the great rewards that could result from their gamble. Says BSB spokeswoman Alison Jackson, describing the lure of such a risky venture: “Once you get rich in this business, you get very rich, and you stay rich for a long time.”