Sky verdict angers cable firms

UK cable companies yesterday threatened to take their long-running dispute with Rupert Murdoch's BSkyB to Brussels, following confirmation that the Office of Fair Trading had cleared the controversial terms under which Sky makes its pay-TV channels available to cable operators.

The revised rate card, formally approved by the OFT yesterday, will be in effect within 60 days, and determines the conditions of supply of BSkyB's pay-TV programming to cable.

Cable operators will be able to choose among various discount options, and to be eligible for discounts even if they do not take all the Sky channels. They will also be able to offer Sky's new sports channel on an a la carte basis.

"The changes increase the flexibility of cable operators in marketing their services, " said John Bridgeman, director general of the OFT.

But the Cable Communications Association reacted bitterly to the decision. "We fail to see how today's announcement is in the consumers' interest," it said in a statement.

The operators complained that they would still be obliged to take most, if not all the Sky channels in order to be eligible for discounts. They were also concerned that Sky's schemes were based on revenues per subscriber, rather than on volume. The cable industry is more concerned to build its subscriber base than to maximise revenues per cable connection.

BSkyB shares rose 13p to close at 489.5p, reflecting the market perception that Sky had once again escaped regulatory restraints. The City was also cheered by reports that BSkyB was poised to award contracts to the manufacturers of set-top boxes, in anticipation of the launch of digital satellite television in late 1997.

The launch of the digital service had been delayed while the Government considered the terms of formal guidelines covering set-top box technology. These are now likely to be laid before Parliament on Thursday, clearing the way for Sky to award contracts worth up to pounds 200m.

BSkyB's more buoyant share price followed several months of uncertainty, particularly over regulatory concerns and the timing of the digital launch. The shares reached nearly 700p earlier this year, but slid to well below 500p.

Sky has held talks with programme suppliers, retailers and manufacturers about its plans for a digital service.