Advertising deal ends BSkyB's legal battle with Discovery

BSkyB has secured a surprise advertising deal with the broadcasting group that owns the Discovery Channel, bringing to an end a protracted legal dispute between the two sides.

Discovery Europe, which has a portfolio of 13 channels in the UK, announced yesterday that it had handed a four-year television deal to the FTSE 100 group's advertising sales arm, Sky Media. The contract is believed to be worth about £200m.

The announcement surprised the market as the two companies had been locked in a legal battle over terms of the existing deal, which expires at the end of the year. The companies disagreed on a contractual clause about bonus fees linked to "over-performance". The year-long legal battle, which was set for a hearing in the High Court next month, has now been settled.

The rapprochement means Sky Media will represent Discovery as its sole airtime advertising sales agent in the UK, under the terms of the new deal. It also means that rival sales houses, believed to include Five, were disappointed in attempting to poach the contract. In the run-up to the new deal it is understood that Discovery had held talks with Sky's competitors.

The factual broadcaster, whose channels include Animal Planet and DMAX and which reaches more than 2.5 million people a day, makes up about 15 per cent of Sky Media's revenues.

Chris Shaw, recently appointed as senior vice president for Discovery's commercial development in the UK, said: "Sky Media has been our ad sales partner since 2002. We look forward to growing the UK business with their support under the new contract and continuing our long and productive relationship."

Sources close to the talks said that, despite the legal dispute, "the relationship between the two sides remained healthy".

Richard Hawking, the operations director at Sky Media, said he was "delighted" the two sides had secured a deal, adding: "Discovery has played an important part in the growth of Pay-TV in the UK and of Sky Media as a TV sales house."