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Channel 5 to seek close ties with BSkyB

Channel 5 Broadcasting, owner of Britain's soon-to-be-launched fifth "free" television channel, is to seek close commercial ties with Rupert Murdoch's BSkyB in a move that could include cross-promotion, joint programme acquisition and even an agreement to distribute Channel 5 on satellite.

The strategy is aimed at improving Channel 5's coverage nation-wide, currently forecast at about 70 per cent of homes. It would also allow Channel 5, backed by Pearson and United News & Media, to develop innovative ways of promoting the new service, perhaps by working jointly with BSkyB's huge marketing team.

In exchange, BSkyB would use its ties with Channel 5 to encourage the take-up of satellite dishes. In addition, it is expected that the satellite giant could redirect some of its pounds 100m-plus annual advertising budget to Channel 5 to promote its 40 pay-television channels.

Traditionally, Sky has used cinemas, newspapers and radio to advertise its pay-television services, partly because of what Sky insiders regard as an unco-operative attitude from the commercial broadcaster, ITV.

David Elstein, chief executive designate of Channel 5 and until last week the head of programmes at BSkyB, said: "I will be asking Sky if they are able to supply an Astra [satellite] transponder as it would certainly help us in our business plan."

He added that carriage by satellite would provide an opportunity for Channel 5 to get into more UK homes. "We would seek to in-fill in the areas beyond our own transmission masts, and we feel it ought to be an opportunity for BSkyB as well to sell satellite dishes."

Mr Elstein said he would also be talking with cable operators, and hoped to secure carriage deals to allow Channel 5 into cable homes in time for the launch on 1 January 1997.

BSkyB sources confirmed the plans to develop close links. It is expected that talks will begin in earnest in the next few weeks.

"There is no secret that there is a close working relationship between David Elstein and senior executives at Sky," a BSkyB insider said last night.

The Independent reported earlier this year plans by BSkyB and Channel 5 to bid jointly for programming.

The much more extensive co-operation pact now under consideration is seen as a logical next move, and will be directed personally by Mr Elstein on behalf of Channel 5.