BBC in BSkyB pay-TV talks

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The Independent Online
Rupert Murdoch's BSkyB last night emerged as a rival suitor for a pay-TV joint venture with the BBC, aimed at creating up to eight new television channels offered on a subscription basis only.

Advanced talks between BSkyB and BBC Worldwide, the corporation's commercial arm, are in parallel to negotiations between the BBC and US-controlled Flextech, the cable and satellite programmer. Sources said a deal with one or the other could be reached within a few weeks.

The dual approach is aimed at ensuring the BBC gets the best terms possible for the development of new channels based on its extensive library and programme-making capacities. It intends to launch the services in time for the introduction of digital television, probably by the end of 1997.

The BBC, which already works with BSkyB on the broadcast of Premier League football, has promised to make its digital programming available on all platforms - satellite, cable or terrestrial - as part of its preparations for the digital age.

The emergence of a potent rival partner for BBC could weaken Flextech's chances of confirming its role as the second force in the pounds 1bn pay-TV market. However, a deal linking the BBC and BSkyB, which currently dominates the pay-TV sector, could be politically sensitive, and insiders were hinting last night that Flextech, controlled by John Malone's US cable giant TCI, could end up as the preferred partner.

The sources also pointed out the attractions for the BBC of seeking closer ties with TCI, which could smooth the corporation's entry into the lucrative but difficult US market.

News of Flextech's potential involvement with the BBC, confirmed in a statement to the Stock Exchange yesterday, sent its shares 27p higher to 501p, and prompted media analysts to predict additional commercial revenues for the BBC, which has been seeking private sector partners following the announcement this summer of a restructuring, aimed at preparing the corporation for digital television.