CWC and BSkyB sign deal to co-operate on digital services

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Cable & Wireless Communications (CWC) is poised to announce a three-year deal with BSkyB in which the two companies will co-operate on the launch of digital cable and satellite television. As part of the agreement, CWC will take BSkyB's pay-per-view films and sports programming.

The announcement, which could come as early as today, will be a blow to the rest of the cable industry, which had been imploring CWC, the UK's biggest cable operator, to present a united front against BSkyB in the battle to overturn the satellite broadcaster's monopoly programming.

Although some City analysts emphasised that the short-term nature of the link-up gave some hope to CWC's cable competitors, others said the deal posed big problems for On Demand Management, the group which has been negotiating pay-per-view film rights with the Hollywood studios on behalf of Telewest Communications, NTL, General Cable and Diamond Cable Communications.

On Demand has so far signed non-exclusive film deals with Warner Brothers and Columbia Tristar, but BSkyB is believed to have negotiated some exclusive rights with several other Hollywood studios.

CWC and BSkyB will jointly market and promote the launch of their digital services to minimise customer confusion over conflicting messages about digital television. BSkyB and CWC are expected to start broadcasting in digital next spring.

CWC will also agree to take Sky Box Office, the pay-per-view service developed by BSkyB. Customers will be able to pay to view individual sporting and movie events. Other programming, such as live pop concerts, has also been trialled on a pay-per-view basis.

Despite extensive co-operation with BSkyB, CWC is likely to insist that it is still committed to its television business. Neither CWC nor BSkyB could be contacted for comment last night.