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BSkyB confirms launch of digital TV this summer

Digital satellite television will be available before the end of June, BSkyB confirmed yesterday. The announcement eased investors' fears that regulatory hold-ups and delays in manufacturing the satellite decoders necessary to receive the service would force the broadcaster to postpone the launch. Peter Thal Larsen reports.

BSkyB said the hardware and software developments for the decoders were on track to allow the launch to take place "in the second quarter of 1998". It had previously aimed to start the 200-channel service in the late spring.

The announcement came too late to salvage BSkyB's share price, which had slipped 12.75p to 432p earlier in the day. The slide was prompted by comments from Pace Micro Technology, one of the four manufacturers chosen to supply the decoders for BSkyB's service. The group said it would not supply any decoders to BSkyB before the end of its financial year in May.

That view was echoed around the industry. Another BSkyB decoder supplier said that it would take at least five months to start producing boxes from when the broadcaster placed its order. "Given that time is critical they had better get on with it," the supplier said. Although BSkyB has selected Amstrad, Panasonic, Matsushita and Pace to supply the decoders, it has not given any firm orders and manufacturers have yet to set up their production lines.

However, observers were sceptical about the claims, suggesting that manufacturers had every incentive to pressurise BSkyB into placing its order.

Meanwhile, BSkyB is understood to be ready to provide all the subsidy required to reduce the cost of the set-top decoders to below pounds 200. The majority of the subsidy, which amounts to about pounds 200 per box, was originally supposed to be borne by British Interactive Broadcasting (BIB), the interactive entertainment joint venture between BSkyB, British Telecom and Matsushita.

But BIB, which is planning to launch its service in the autumn, is still awaiting regulatory clearance from the European Union competition authorities. Although it is eventually expected to win clearance, it cannot authorise the subsidy for the decoders until approval comes through. Without the subsidy, meanwhile, suppliers are reluctant to start manufacturing.

BSkyB is now understood to be proposing that it guarantees the full subsidy on the boxes, and that BIB pays it back when it achieves regulatory approval.