Telewest threat to Carlton's cable plans

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The Independent Online

Media Editor

Ambitious plans by Carlton to expand into the pay-TV cable market have been thrown into confusion following disagreements with Britain's largest cable operator.

In a surprise move, Telewest, which supplies 400,000 cable subscribers, has demanded fresh terms before agreeing a firm contract to distribute Carlton's SelecTV cable channel, bought last week for pounds 5.2m.

Wide distribution of the channel - which will feature programming from the back library of Carlton and its sister company Central - is seen as key to the company's plans to become a leading broadcaster of pay-TV services.

Carlton, whose chief executive is Michael Green, said last week it had inherited iron-clad agreements for distribution on cable well into the future. The SelecTV channel was launched in June, but it emerged yesterday that SelecTV and Telewest had only reached heads of agreement on carriage terms.

The negotiations to reach a full contract had been halted while Pearson, the media and publishing company, completed its pounds 45m purchase of SelecTV. As part of that deal, finalised last week, Carlton bought the cable channel.

Telewest declined to comment, but a source close to the company said yesterday that it is demanding lower charges and more hours of programmes in exchange for the firm contract.

It is believed that Telewest is paying SelecTV 25p per subscriber per month for seven hours of programmes on weekdays and 12 hours at weekends. The schedule includes repeats of hit programmes such as Lovejoy and Birds of a Feather.

Fees from Telewest are currently worth about pounds 1.2m a year. Carlton has secured distribution agreements with other cable operators which cover an additional 500,000 subscribers and which are worth about pounds 1.5m a year.

Telewest is believed to be seeking assurances that Carlton will extend SelectTV's broadcasting day, perhaps to 17 hours. It also wants to pay less per subscriber - as little as 15p, for subscription revenues of about pounds 720,000 a year.

Carlton declined to comment on the talks with Telewest. The company is expected to seek additional distribution agreements with satellite broadcasters within two years, and hopes eventually to reach five million households.