EC sources say that General Cable, the UK's fourth largest quoted cable company, is hoping to halve the cost of buying one premium sports or film channel from BSkyB. The company has taken its grievances over the satellite broadcaster's programme supply terms to Brussels after attempts to get the UK competition authorities to intervene appear to have failed.
At the end of last year, the Office of Fair Trading cleared BSkyB's rate- card which determined the terms on which the company supplied programming to cable operators. The decision caused uproar in the cable industry.
Customers who receive pay-TV through a satellite dish pay pounds 20.99 to receive BSkyB's basic channels and one premium sports or film channel. Cable operators pay BSkyB and other programmers around pounds 17 for a similar package. Cable companies claim the discount is insufficient to allow them to make reasonable profits on their television businesses.
General Cable charges its customers around pounds 27 for basic channels and one premium channel, thereby making pounds 10 of profits. However, the high cost to subscribers will inhibit uptake of cable television, the company alleges.
General Cable declined to comment yesterday. However, last month the company denounced the way it was forced to "subsidise Mr Murdoch", and scaled back its involvement in cable television. Interim pre-tax losses of pounds 25m this year resulted in General Cable raising its subscription prices and reducing the variety of television services on offer.
The company indicated at the time that it would only change its attitude to television if programme supply arrangements changed substantially. General Cable's confrontation with the EC appears to be a last-ditch attempt to overturn BSkyB's rate-card.
Although the OFT's approval of the existing rate-card at the end of last year angered cable companies, John Bridgeman, Director-general of the OFT, did make some concessions. Cable operators were, for example, given greater flexibility in what they were able to offer subscribers. However, BSkyB imposed financial penalties on cable operators buyingflexible packages of channels.
Cable companies were granted permission to offer both telephony and television in the early Nineties. The UK cable industry now makes most of its money from telephony because of the high cost of content and large number of customers failing to renew television subscriptions.
- Cathy NewmanReuse content