BSkyB to launch pay-view assault

Satellite plans: Talks with boxing promoter Frank Warren under way as broadcaster reveals record profits
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The Independent Online
BSkyB, the satellite broadcaster, is considering plans to broadcast top boxing matches on a pay-per-view basis this autumn, featuring star British fighters such as "Prince" Naseem Hamed.

Frank Warren, the leading British promoter, confirmed last night he had talked to BSkyB about putting together world-level matches featuring both British and US boxers.

"Pay-per-view is not just the future, it is a fact now," Mr Warren said. "If we don't broadcast fights on pay-per-view, all the major bouts will simply move to the US for the money."

The broadcasts would mark the first pay-per-view events in the UK since the controversial Bruno-Tyson fight, for which 650,000 Sky subscribers paid either pounds 9.95 or pounds 12.95. BSkyB has long hinted it planned further PPV events, including sport and films.

BSkyB's chief executive Sam Chisholm declined to comment directly on pay-per-view plans. "The mechanics of how you do it are in place, and we know there is a silent majority out there who believe that pay-per- view is something they want," he said.

The news emerged as BSkyB, 40 per cent owned by Rupert Murdoch's News Corporation, unveiled another set of record pre-tax profits, up 66 per cent year on year to pounds 257.4m, on revenues that for the first time breached the pounds 1bn mark.

Analysts said the results proved how lucrative Sky's near-monopoly in pay television continues to be, and suggested next year's figure could rise to as high as pounds 350m, helped by yet another year in which the company will benefit from past tax losses to avoid mainstream corporation tax.

"This is an outstanding financial performance," Mr Chisholm said. He predicted an even brighter future for the company, following the introduction of digital television at the end of next year.

"The digital satellite product has been the hottest consumer electronics launch in the history of the US, and will attract similar response here," he said. "Digital is a brand new market that a lot of people will want to get into." He confirmed that BSkyB, which broadcasts 30 channels in the UK, including Sky One, is considering jointly developing interactive services on digital TV with BT, the telecoms giant. These would include electronic banking and home shopping.

The digital plans call for as many as 200 new channels, featuring movies, sport and as many as 60 channels dedicated to pay-per-view. Mr Chisholm declined to comment on talks now under way between BSkyB and the BBC about jointly developing six to eight new channels, to be introduced within the next year. But analysts said the channels would be a welcome addition to Sky's digital platform.

Flextech, the pay-TV programmer owned 51 per cent by giant US cable company TCI, is also negotiating for the right to co-develop the BBC offerings. The two suitors expect the BBC to make a decision within two to three months.

Mr Chisholm also confirmed that heads of agreement had been reached with Leo Kirch, the Bavarian media mogul, to cement a pay-TV joint venture in Germany. The service, in which BSkyB is to invest as much as pounds 200m in start-up costs, will be owned 51 per cent by Kirch and 49 per cent by Sky.

"The German deal is an absolutely brilliant one for BSkyB," said one analyst. "They get a part of a market that has 32 million TV homes and a proven appetite for pay television."

There were some concerns, however, that BSkyB may not be able to maintain its fast growth, as more competitors come into the market and due to its reliance on cable as a means of distributing its programming grows.

Revenues from direct-to-home subscribers rose 25 per cent in the year just ended, compared to a 63 per cent jump from cable. "Cable doesn't generate the same kinds of revenues per subscriber," one analyst warned.

Investment Column, page 18