ITV and C4 join cable campaign

ITV and Channel Four joined UK cable companies yesterday in a campaign against BSkyB, the cable and satellite broadcaster 40 per cent owned by Rupert Murdoch's News Corporation, prompting a fresh row in the fractious UK media market.

Michael Grade, chief executive of Channel Four Television, and Leslie Hill, chairman of ITV Association, said in a letter to Michael Heseltine that BSkyB "had built a new monopoly position in the UK pay television market" and that the lack of alternative sources of pay-TV programming was against the public interest.

They specifically criticised fixed-term agreements between BSkyB and the two largest cable companies - Nynex CableComms and Telewest - and called on Mr Heseltine, the President of the Board of Trade, to refer the contracts to the Mergers and Monopolies Commission.

David Elstein, head of programming at BSkyB, defended the agreements. "We were only doing what the OFT said we should do," he said, referring to informal undertakings reached between the Office of Fair Trading and BSkyB earlier this year regarding long-term programme supply arrangements for pay television.

"This is a campaign driven by fears that we will soon launch a digital television system," he said, adding that "we are happy to work with any terrestrial broadcaster."

Mr Elstein said that, by contrast, Mr Grade had been unwilling to allow theatrical films in which Channel Four invested to be shown on pay-TV despite several requests from BSkyB. "Clearly, Channel Four is discriminating against us," Mr Elstein said.

Mr Grade responded angrily to the accusation."Film on Four is our brand," he said. "Why should we let Mr Murdoch have it? This is our birthright."

The ITV/Channel Four letter is the latest salvo in what has become a calculated campaign to increase pressure on the OFT to review the cable contracts. Last week, UK cable companies, led by International CableTel and Videotron, said they had lodged formal complaints with the OFT and competition authorities in Brussels, claiming the long-term agreements, which include non-competition clauses enjoining Nynex and Telewest from broadcasting sports and movie services that compete with BSkyB, constitute a restraint of trade.

According to industry sources, cable executives are now in talks with independent production companies, as well as cable TV channels, to secure a new range of film and sports programming that would be broadcast only on cable.

Cable companies without fixed agreements have six weeks to decide whether to sign. SBC CableComms appeared unwilling to sign a "non-competition" contract. But industry sources said the company may be in talks leading to its sale to Telewest, already in the BSkyB camp. A deal might come as early as next week in what analysts said would be a step toward consolidating the fragmented cable market.