BSkyB `on course for Warner deal'

Television wars: Satellite giant marches relentlessly on as a change in the rules spells further consolidation in the sector

BSkyB yesterday vigorously denied claims that it had indefinitely postponed the UK launch of the Warner Channel after pressure from Rupert Murdoch, the satellite channel's 40 per cent shareholder.

Gerry Robinson, chairman of BSkyB, insisted the decision had been entirely a commercial one taken by the company itself and claimed a deal with Warner could be signed soon.

"We continue to be in discussions with them and we expect a satisfactory outcome," he said after BSkyB's annual meeting yesterday.

On Thursday night the group made the surprise announcement that the Warner Channel would not be appearing yesterday, even though the US company had advertised a 1 November launch around the UK. Warner Channel, part of Ted Turner's Time Warner empire, would offer a selection of cartoons including Bugs Bunny and a range of old films.

Sources close to BSkyB claimed the delay had been caused by arguments over the price of the channel, rather than the long-running and public feud in the US between Mr Murdoch and Mr Turner.

Mr Murdoch, a BSkyB director, was noticeably absent from the podium at the AGM in London. His daughter, Elisabeth, also a BSkyB executive though not on the board, was in the audience.

This latest twist in the saga of Mr Murdoch's tightening grip on the pay-television market emerged as BSkyB released figures showing growth continued to exceed expectations.

Pre-tax profits soared by 31 per cent, from pounds 51m to pounds 66m in the three months to the end of September against forecasts of around pounds 60m, while turnover jumped by 24 per cent to pounds 266m. Earnings per share increased by 30 per cent, to 3.9p.

There was a net increase of 146,000 new subscribers during the period, taking the total number of paying customers in the UK and the Irish Republic to 5.65 million, of which 3.3 million used satellite dishes and 1.87 million received BSkyB through local cable companies.

The group also disclosed that it was considering further investments in Germany in addition to the 49 per cent stake in DF1, the digital television transmission platform in July.

The results did little to bolster the company's flagging share price, which has fallen sharply on news that Mr Murdoch was considering using his stake as collateral to raise $1bn in a convertible share issue to fund future media projects. Shares in BSkyB fell 9.5p to close at 569p.

Asked by one small shareholder at the AGM whether Mr Murdoch intended to go ahead with the controversial arrangement, which was apparently postponed pending yesterday's quarterly results, Mr Robinson replied: "Nothing has been finalised on that ... we at BskyB have no influence over that."

The board also managed to fend off a shareholder revolt over a resolution that would prevent two directors from ever having to be re-elected to the board in future. Both Jerome Seydoux and Michel Crepon were reappointed under the controversial formula which also applies to other directors after Mr Robinson announced that shareholders accounting for 96 per cent of the company had voted in favour.

One investor, John McCallum from the West Midlands Pension Fund, said the provisions were "so banal they are unbelievable".