A French conglomerate, Vivendi, made a raid on BSkyB shares yesterday. The raid netted it a 17% stake in BSkyB. This has led to speculation that some form of merger between Canal Plus and BSkyB may be possible as Vivendi owns 34% of Canal Plus. The Canal Plus chairman, Mr Pierre Lescure, told a press conference that given Canal Plus' share involvement, BSkyB needed Canal Plus more than Canal Plus needed BSkyB. The general opinion is that BSkyB is perhaps in need of a merger as new subscriptions to Sky Digital continue to crawl. 

The problem with the Digital Television market is that it is trying to adhere to the rules that would have applied in the pre-web 1990s. The information rich nature of the internet has made a back channel to the net all that more essential. While BSkyB's ISP venture, SkyNow is a move in the right direction, it seems to ignore the growing threat from Digital Cable Television.

Most of BSkyB's value is in the perceived value of the subscriber base. With the increasing level of cable television penetration in the UK, the market for BSkyB's satellite services becomes ever more dependent on deals with cable television companies. The transition to digital is critical for the survival of BSkyB and digital cable television, especially in the urban centres of the UK reduces the viability of SkyDigital. It needs to move into the mainland of Europe for future expansion. The stock acquisition by Vivendi will make this all the more difficult.