The Government is poised to open the domestic satellite market to all comers, including Rupert Murdoch, in a move that will have radical implications for British broadcasting.
An amendment introduced by the Government in the House of Lords last week has the effect of removing restrictions in the Broadcasting Bill on two large national newspaper owners - Mr Murdoch's News Corporation and Mirror Group - from owning more than 20 per cent of licensed domestic satellite services in the UK.
Analysts said the amendment could allow Mr Murdoch's 40 per cent owned BSkyB, currently classified as a "non-domestic" satellite broadcaster, to launch its own satellite to serve the UK market.
BSkyB, the UK's only pay-TV satellite broadcaster, would not comment on its plans but Mr Murdoch said last year he would consider launching or buying his own satellite.
That would free capacity on existing satellites for use by Mr Murdoch and his European partners for pay-TV services on the Continent. Last week, BSkyB announced an alliance with Germany's Bertelsmann and French media companies Canal Plus and Havas to explore further pay-TV opportunities.
Currently, BSkyB channels are transmitted via the Astra satellite, owned by SES of Luxembourg. Sky merged with BSB, then the only domestic satellite company in the UK, in 1990, but was exempted by the Thatcher government from any licensing requirement.
The original draft of the Broadcasting Bill, aimed at sweeping away most cross-media ownership restricitions, contained a prohibition on any newspaper proprietor with more than 20 per cent of the national market from holding a domestic satellite licence.
The prohibition extended to ownership of a Channel 3 or 5 licence and national or local radio. Only Mr Murdoch's News Corp, which, through News International publishes four national titles, and Mirror Group, owner of the Mirror titles, the People and 43 per cent of the Independent, were caught by the clause.
A spokesman for the Department of National Heritage said yesterday the amendment was aimed at "deregulating the market for broadcasting," and said there had been no special lobbying from BSkyB. A source at the company has also denied having lobbied on the issue.
The company still faces one important stumbling-block. The Government is currently considering changes to the definition of "control" in the Broadcasting Bill, and could decide that News Corp, an Australian-based company, is ineligible to own a domestic satellite operation outright. Currently, non-EC companies are restricted to just 29.9 per cent of such services.
Alternatively, the Government could give the Independent Television Commission, the TV regulator, discretion to determine whether broadcasters are in fact controlled by other companies.
But BSkyB lawyers have been briefing National Heritage officials and are confident the Government will accept that the company, which is quoted on the London Stock Exchange, is UK-controlled.