BSkyB chief Chisholm makes pounds 6.8m in a year

Sam Chisholm, the outgoing head of BSkyB, almost doubled his remuneration last year, taking home a total of pounds 6.8m. As Cathy Newman reports, that makes him one of the highest paid executives of a UK quoted company.

Mr Chisholm, who is to step down at the end of the year due to poor health, made pounds 5m by exercising 1.8 million phantom share options. He also received a bonus of pounds 1.3m to add to his basic pay of pounds 302,575.

Over the past two years, the ebullient BSkyB boss has earned a total of pounds 10.7m. The money paid to Mr Chisholm is set to cause controversy with shareholders, particularly as the company's share price has underperformed in the last few months.

Other high pay awards in the media industry that have upset investors include WPP's chief executive, Martin Sorrell, who made pounds 2.8m last year.

A BSkyB spokesman defended Mr Chisholm's pay package, saying it was closely linked to the performance of the company as 75 per cent of his salary last year derived from phantom share options.

It also emerged yesterday that BSkyB was poised to sign a pay-per-view film deal with Warner Brothers, the Hollywood studio which has just agreed terms with On Demand Management, a consortium of cable companies.

BSkyB is expected to clinch a deal with Warner and other Hollywood studios before the end of the month, enabling its subscribers to pay to view specific films. The satellite broadcaster had originally hoped to tie up an exclusive deal with Warner, but it now looks set to share the film rights with the cable companies.

A BSkyB spokesman said: "BSkyB has signed pay-per-view deals with a significant number of studios, the majority of them for exclusive pay-per-view film rights."

BSkyB is certain to have negotiated an exclusive agreement with Twentieth Century Fox, which is owned by News Corporation. Rupert Murdoch's News Corp has a 40 per cent stake in BSkyB.

Meanwhile, cable industry sources said that On Demand - the group representing Telewest Communications, NTL, General Cable and Diamond Cable Communications - was close to agreement with two other studios, Sony, and Paramount.

In return for Hollywood film rights, the cable companies will be obliged to carry various "vanity channels" owned by the studios, which will take up valuable capacity on the analogue cable network.

As part of the Warner deal, for example, cable operators will have to offer subscribers CNN, owned by Warner, free of charge. BSkyB will not be faced with the same problem, as satellite subscribers who have a dish already get CNN for free.

The studios are likely to receive roughly half of the revenues from film pay-per-view.

Separately, General Cable announced yesterday that it was to take a pounds 35m charge to reorganise the business and refocus on telephony. The company said it could not make money from cable television because of the conditions imposed by programmers such as BSkyB. As a result, the company will in future only sell cable television packages to users of its telephone services.

David Miller, finance director of General, said: "We're chasing our tails trying to sell cable television as an end in itself. Although today we sell TV and telephone, tomorrow we will sell access through which you can buy pay-TV, near video-on-demand and so on."

Around 15 per cent of General's subscribers take cable television without the telephone service. As a result, Mr Miller said he expected the company's pay-TV penetration to fall.

Construction of the cable network will be frozen, General said, which would lead to around 50 redundancies out of a workforce of 1,500. Investment in analogue equipment will also cease, but the company expects to launch its digital TV service towards the end of next year.

In addition, the company is to raise its prices. New customers will have to pay pounds 45 for basic and premium services. Existing subscribers will continue to be charged pounds 38 a month for premium channels.

In a similar move to curb losses Telewest, the second largest UK cable company, cut 1,400 jobs last August and said it would delay the completion of its network for two years.

Mr Miller said General had notified BSkyB that it would be dropping Sky News. The service is to be replaced by the BBC's new 24-hour channel, although Mr Miller added that no concrete agreement with the BBC had yet been signed.

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