BBC to launch satellite stations: Joint venture with Pearson for European news and entertainment channels

THE BBC will launch two satellite television stations in a joint arrangement with Pearson, the publishing and media group. The pounds 30m launch, later this year, will comprise two new BBC European television channels - a news and information station and an entertainment one.

The news channel will be funded by advertising and the entertainment channel by subscription. Distributed by Eutelsat and Intelsat respectively, they will not be available in Britain.

The initiative offers a profitable new source of revenue for the BBC to augment the annual licence fee.

Announcing the co-operation agreement yesterday, the BBC and Pearson said they intended to launch satellite channels worldwide and exploit developing global media markets. The two organisations aim to challenge the dominance of Rupert Murdoch's News Corporation and Ted Turner's Cable News Network. The British pair will look for additional local partners, region by region, to put up part of the finance. A third partner for Europe is being sought.

The first two services will be marketed through the developing continental European cable networks and will draw on both the BBC's archives and those of Thames Television, the former ITV company now owned by Pearson.

Yesterday's announcement follows a poor start for BBC World Service Television in Asia and India. The BBC's partnership deal with Star Television, now owned by Mr Murdoch, has soured. It has been removed from the service beamed into China. Pearson, at one point targeted for takeover by Mr Murdoch, owns 17 per cent of BSkyB which Mr Murdoch dominates.

John Birt, BBC director general, said that the BBC had realised a year ago it had the most powerful broadcasting brand worldwide - thanks largely to the success of BBC World Service radio - but needed dynamic leadership and partners to provide the funds. He said the Government knew and approved in broad terms of the arrangement, which does not contravene its charter and licence.

The BBC must demonstrate it is not using public funds to subsidise a commercial venture. Longer term it aims to generate 'substantial additional commercial contributions to supplement the core licence fee funding'.

Pearson and the BBC will review opportunities for extending the news and information channel to other regions, both in English and in local languages. It will also look at possible new channels for children's programmes, documentaries and education. The prime focus will be the Far East, India and North and South America.

The Government is anxious for the BBC to develop new sources of revenue to supplement the licence fee.

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