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BBC blow to Sky

The BBC will this week confirm reports that cable companies have agreed to show its forthcoming 24-hour news service, a move that will cut pounds 15m from BSkyB's revenues next year.

Telewest Communications, the second biggest cable company, said it will show the BBC channel in place of Sky News - for which BSkyB has recently increased charges by 6.5 per cent. Telewest said it will drop Sky News from its schedule as soon as its contract with BSkyB allows.

Cable & Wireless Communications, the biggest, said it had signed with the BBC but would still show Sky News as well.

Analysts this weekend were unsure as to how this squared with Friday's announcement by CWC that it would sign an exclusive agreement with BSkyB to carry its programming. CWC refused to comment.

The CWC deal is expected to enhance BSkyB's position as the dominant supplier of premium and pay-per-view channels and is likely to offset the loss of the Sky News contracts.

Telewest Communications said it has also decided not to show National Geographic, the BSkyB channel that will replace Sky 2, an entertainment channel, from next week.

The cable companies' move is a landmark in their bid to reduce their dependence on BSkyB for programmes, which has led them to complain to regulators, including the Office of Fair Trading, the Independent Television Commission and the European Commission over the last few years.

"This is a very significant move on the cable companies' part and should create a closer alliance between them and the BBC and other independent programmers," said Dennis Garrison, managing director of Knowledge TV, a business and careers information channel. "Cable operators are demonstrating the right to carry any programming they like."

BSkyB declined to comment on the reports.

The European Commission is still investigating whether BSkyB's contracts with the cable companies are anti-competitive, while the ITC is expected to complete an investigation next month into whether BSkyB should be allowed to insist that cable companies buy channels in packages instead of individually.

The 24-hour news service, in which the BBC has invested pounds 26m will be available free of charge to the cable companies and other digital broadcasters.