BSkyB gives up on £1.2bn owed by Kirch

BSkyB was finally forced to admit yesterday that it had little prospect of recouping the €1.7bn (£1.2bn) it is owed by Kirch as a second part of the German media empire filed for insolvency.

Kirch Group's heavily loss-making pay television unit made the filing after failing to renegotiate costly film and sports contracts or to find fresh funds for its ailing operations. It came a month after its core film rights and broadcasting unit went into insolvency.

Sky, which owns 22 per cent of KirchPayTV, has an option to sell the stake back to Kirch for €1.6bn in October. The UK satellite broadcaster said it was unlikely to receive a significant amount unless the "liquidity issues" surrounding Kirch and its Taurus holding company were resolved. The stake had already been written off in the Sky accounts but the company had repeatedly said it was pursuing the money. There had also been speculation Sky would simply take over the pay-TV unit in lieu of the cash.

The latest filing, which underscores the complex web of businesses created by the Bavarian media mogul Leo Kirch, does not include the group's flagship German pay-TV channel Premiere World. That is held by a separate, wholly owned company and will remain on air for the moment.

Separately, in the UK Sky was told by the telecoms regulator, Oftel, that it must scrap a flat-rate levy charged to rival broadcasters to carry their programmes and instead set charges according to how much others make in advertising and subscriptions. Broadcasters such as the BBC pay Sky to carry their channels on its digital TV platform, which has more than 5.7 million customers.

Oftel wants Sky to set charges according to the revenue channels produce, making it more affordable for the owners of small channel to be carried on Sky. In response, Sky welcomed Oftel's decision not to set the charges itself, nor to exclude any type of broadcaster from the charges.