BBC due for showdown talks with Sky

BBC executives are to meet BSkyB today to try to thrash out a deal over satellite broadcasting or the corporation will go to the regulators.

Relations between the two TV giants are said to be tense following the BBC's decision to dispense with Sky's encryption services and put its channels on a separate satellite. The BBC's move to broadcast unencrypted will save it £85m over five years and Greg Dyke, the corporation's director general, has said he expects other public service broadcasters to follow.

However, the corporation requires Sky to upgrade its software to accommodate the BBC's switch to the new Astra 2D satellite technically. It also wants to retain its prominent 101 and 102 slots on Sky's on-screen listings service, its Electronic Programme Guide, for BBC1 and BBC2. Sky has said that once the corporation goes out unencrypted it may lose these slots, raising fears at the BBC that its channels will get lost among the hundreds of channels available on satellite.

A BBC spokesman said that if Sky tries to charge it excessively for the software change, it will appeal to Oftel, which regulates the issue. "We are happy to pay a reasonable price for the upgrade," he said.

The spokesman added that the BBC must be given "due prominence" on the EPG, according to rules drawn up by a different regulator, the Independent Television Commission. It will ask the ITC to enforce this.

This year BSkyB more than doubled the charges it levies broadcasters who do not pay for its encryption services, to £75,000 a channel for a year. The BBC has eight stations, meaning it must now pay £600,000 a year, but it is not challenging the level of the fees, which are regulated by Oftel. However, Oftel is investigating the levy anyway, following a complaint by Simply TV, which broadcasts 11 channels without encryption via satellite.

The BBC's decision to drop Sky's services may mean that those without a Sky subscription will no longer be able to watch ITV, Channel 4 or Channel 5 on satellite. The BBC had previously paid the costs of a viewer card for people in this position, as it was needed to see the corporation's channels but, on Astra 2D, this is no longer necessary.