Prescott slaps down complaint over BSkyB

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John Prescott, Labour's deputy leader, moved swiftly last night to quash a call by a party spokesman to refer Rupert Murdoch's BSkyB to the Monopolies and Mergers Commission. Richard Caborn, Labour's shadow minister for competitiveness and regulation, had made the demand in a strident letter to Michael Heseltine, the Deputy Prime Minister, copied to Ian Lang, President of the Board of Trade. Mr Caborn called Mr Murdoch's pay-TV monopoly "a serious threat to the development of the UK's broadcast and communications industry", only to be slapped down by Mr Prescott, who said the letter did not represent party policy.

The disavowal will be taken as further evidence of Tony Blair's new Labour "cuddling up" to Mr Murdoch. A party source insisted last night that the reason was because the policy was still under discussion by Mr Prescott, Margaret Beckett, shadow Secretary of State for Trade and Industry, and Jack Cunningham, the national heritage spokesman. But this latest example of new Labour's strict policy discipline - coming after the letter had been dispatched and disseminated in a press release - is embarrassing, and could fuel renewed claims of Mr Blair's unwillingness to trample on Murdoch territory.

The move by Mr Caborn, who ran Mr Prescott's leadership and deputy leadership campaigns, follows furious lobbying by UK cable operators to end what they call BSkyB's "abuse" of its monopoly position in pay-TV programming on satellite and cable. Mr Caborn complained that, despite the complaints, the Office of Fair Trading "seems unable to reach any final decision".

With the introduction of digital television, he added, "independent cable/satellite companies could be squeezed out of the market for new digital services and products if BSkyB's stranglehold is transferred from the analogue to digital environment."

While complaints in that vein were ruled out of order yesterday, the Labour source said the party remained concerned about the Office of Fair Trading's delay in coming up with an effective competition policy.

That still leaves Labour open to the criticism, however, that it is waiting for someone else to act instead of spelling out its own policy.

Specifically, the cable companies have complained that long-term supply agreements between BSkyB and the two biggest cable operators, Nynex CableComms and Telewest, are anti-competitive, and had made it impossible for the cable industry to develop pay-per-view sports and film programming to compete with BSkyB.

The OFT said late this summer that it had demanded changes in the agreements but has yet to announce the new contract terms. A spokesman for the OFT said: "The contracts are very complicated and we are still considering the arrangements." He added that there was no timetable for a decision, and that consultations continued.

Earlier this year, BSkyB agreed to informal undertakings on the supply of programming to the cable industry. But many smaller companies complain that the agreements have not improved competition in the industry.

Mr Caborn's letter followed several high-profile complaints from senior media executives, including Channel 4's Michael Grade and Leslie Hill, chairman of Central Television. "My letter reflects my concerns about the lack of competition policy we have in this country," Mr Caborn said.