Ireland emerges out of two-station land this Monday evening. For the past five years, TV news has essentially been dominated by RTÉ and TV3. Now this somewhat cosy duopoly (the stations do not run their bulletins against each other) is about to be shattered by one of the most aggressive and successful pay-TV companies in the world.

Sky News, a division of BSkyB, broadcasts its first specifically Irish bulletin from a studio in Dublin this Monday evening at 7 p.m. The Taoiseach will be on hand to usher in the first broadcast. After he cuts the ribbon, each weekday evening two half-hour bulletins will air at 7 p.m. and 10 p.m.

With former TV3 and TG4 newscaster Grainne Seoige on board, the new operation will employ 21 people and an investment of more than €2 million is understood to have gone into the project.

While correspondents such as Adam Boulton, newscasters like Kay Burley and smiling Irish-born weather girl Lisa Burke have ensured a loyal following for mainstream Sky News in Ireland, the audiences have been relatively small.

Figures show that between May 2003 and April 2004 the flagship 9 o'clock Sky News bulletin only managed to attract about 9,000 viewers on average, just over 1 per cent of the market (although its performance picked up during the Iraq war).

In contrast RTÉ1's 9 o'clock bulletin boasted 332,000 viewers, almost 40 per cent of the market. TV3's 5.30 bulletin was able to pull in 88,000 viewers representing 18 per cent of the market at that particular time.

It is clear Sky has a long way to go to become a serious news player in the Irish market. But RTÉ and TV3 would be wrong to be complacent.

Just ask any BBC or ITV executive how quickly Sky were able to take a slice of the television market in Britain.

MCM Communications, is the media buying/planning arm of McConnells, the largest Irish-owned advertising agency. Its director, Ms Fiona Scott, regards Sky News and Sky generally as a slightly marginal player right now, but does not rule out the company taking a larger share of the advertising market.

"Sky News in January to March last year received a share of 3.2 per cent (11,000) but this was due to the war in Iraq. It is included on advertising schedules alongside Sky 1 and would get an upweight for ABC1 or business-targeted campaigns. However, it is a small percentage of the budget as it delivers a relatively small audience," she says.

She is cautious about the new creation, Sky News Ireland.

"I am not sure that Irish news will deliver significantly larger numbers so, whilst we will look for spots to be placed there, it will be as part of our existing campaigns and not additional revenue," she explains.

"In general, we are supporters of the Sky 'opt out' as it has provided more choice and helped to reduce the cost of TV campaigns. Sky 1 is performing well and would be on all our schedules.

"As you know, they have introduced a limited 'opt out' on the sports channels and, as their subscription base grows, I would expect them to offer Irish opt outs on the movie channels as well," she adds.

Whatever progress lies ahead, the story of Sky to date has not been a good one for companies such as NTL and Chorus, with the latter in serious financial trouble.

Sky Ireland boss Mr Mark Deering yesterday said there were now 315,000 subscribers to Sky Digital in the Republic. Next week fresh results will probably show even higher subscription levels.

Based on average revenue per user, Sky is understood to be producing annual turnover of about €180 million from the Republic via subscriptions.

Then there is advertising revenue from the various 'opt out' channels such as Sky One, Sky News, Sky Sports 1 and Sky Sports 2. The scale of this advertising revenue has not been disclosed, but TV sources estimate it totals €17-€20 million.

There is now talk of Sky accommodating further advertising revenue on its movie channels. Profit figures for the Republic have never been disclosed, but it is clear that Sky has been immensely successful in pulling revenue from the Irish market. The cost of Sky News Ireland is likely to represent just a tiny portion of this.

Sky's rivals suggest the company is opening Sky News Ireland precisely because of its tremendous success in generating revenue from the State. The company has escaped Irish regulation and does not pay VAT on subscriptions in the Republic. This has allowed Sky's rivals to insinuate that it takes a lot from the Irish market but returns very little.

This appears to be a view held by rivals such as TV3, which has long claimed that Sky has an advantage over RTÉ and TV3.

"They have invested very little in Ireland compared to broadcasters based in this State. The reality is they can run adverts which are prohibited in Ireland. They don't even have to observe rules in relation to election coverage," says Mr Rick Hetherington, TV3's chief executive.

Mr Deering, who ironically used to be TV3's director of legal affairs, has pointed out in Sky's defence that the company has invested €100 million in the roll out of its digital services in the State.

Not being regulated by ComReg or the Broadcasting Commission of Ireland (BCI) does confer some commercial advantages on Sky. If Sky was regulated by ComReg it would have to hand over 3.5 per cent of its annual revenues to ComReg, just like NTL and Chorus. It might also face possible price controls over its subscription services. If the BCI could get its hands on Sky, certain children's adverts would be prohibited from channels such as Sky One.

However, to be fair, Sky has not found some secret way to avoid the clutches of regulators. It has this freedom because it is a satellite broadcaster.

Rupert Murdoch, who remains the largest shareholder in BSkyB, realised a long time ago that cable companies had one major and obvious disadvantage - they were confined by their physical structures.

Cable companies have to constantly upgrade their networks and, in a small market like Ireland, the economics of doing this are very unattractive. Sky's model over the past few years has been much simpler and effective. Use sports and movies as a battering ram into people's homes and once you win them over as subscribers, you can sell them extra premium and interactive services.

It helps that Sky has managed to do a very good job in presenting things such as Premier League football and big set-piece news events. While some people remain squeamish about the Murdoch associations, a survey last year of 201 British MPs rated Sky more impartial than the BBC.

Whether Irish politicians and viewers will take Sky News Ireland to their hearts in the same way remains to be seen. If they do, Sky is likely to reap further financial rewards.

While news is rarely a ratings buster, Sky News Ireland could open the door for more sustained Irish programming. Mr Nick Pollard, head of Sky News, yesterday said the company was considering adding more staff in the years ahead.

Sky News Ireland also revealed yesterday that interactive features are possible on the new Irish service.

Ms Scott believes this could deliver further commercial dividends for Sky. "The other area of development is interactive. The UK can run interactive commercials on the Sky channels as well as getting involved in the shopping and game areas. Once the costs are sorted, this should also be available to Irish advertisers."

With new interactive services, Irish advertising on potentially eight or nine channels, a new Premier League contract and its own Dublin-based news service, Sky has successfully gatecrashed the party and does not intend to leave any time soon.