ITV tax deal could hit BSkyB

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The Independent Online
ITV Chiefs are pressing the Labour Party to agree to a tax pact which would take pounds 150m a year from Rupert Murdoch's BSkyB satellite channel.

Under the plan, BSkyB would lose its tax-exempt status and be forced to join the terrestrial broadcasters in paying its share of a tax burden which generates pounds 400m a year for the Treasury.

The campaign to introduce a "level playing field" system of taxation for broadcasters is being led by Ward Thomas, chairman of Yorkshire Tyne Tees Television. He has had discussions with both the Labour and and Conservative parties about changes to the broadcasting tax regime which would remove BSkyB's current exemption.

"There is support for the level playing field proposals," Mr Thomas said. "I am encouraged by the reaction from both sides of the political spectrum."

One senior ITV executive reported that, in private discussions with senior Labour Party figures, he had been told that the level playing field approach would be adopted as policy if Labour won the next election.

However, Jack Cunningham, the shadow Heritage Secretary, moved swiftly to distance the party from a controversial policy which would put Labour in direct conflict with Mr Murdoch's powerful media empire.

"The level playing field proposals were first raised during the course of the Broadcasting Bill earlier this year," he said. "Labour did not adopt the idea at that time and we are not looking further at any such proposals."

TV industry sources accept that neither Labour nor Conservative politicians want to antagonise Mr Murdoch so close to an election. Any changes to the broadcast tax regime are unlikely until 1999, when the ITV Channel 3 licences are renegotiated.