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BBC declares war on BSkyB in row over payments

Saeed Shah
Thursday 13 March 2003 01:00 GMT
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The BBC yesterday directly took on BSkyB by refusing to pay the satellite group to broadcast its channels and declaring that it would develop a free-to-air satellite market.

The corporation announced that it would not pay carriage charges for its channels to be made available on Sky's digital platform. The charges have been condemned as excessive by public service broadcasters.

Instead, the BBC will use a different satellite to beam its channels to homes that want to receive their signal from a satellite dish, by-passing Sky's system altogether. Greg Dyke, director general of the BBC, said: "This is an important decision for the BBC which will save us a considerable amount of money."

Households with a satellite dish and decoder box will no longer need a Sky subscription or Sky viewing card to watch the BBC and around 70 other free-to-air channels that are available. The corporation said this would save £85m over the next five years – £30m on Sky's encryption services and £55m to pay for the viewing cards.

ITV has bitterly complained about the £17m a year it must pay Sky for carriage and indicated yesterday that it may follow the BBC. Public service broadcasters argue that the carriage fees are not effectively regulated. The BBC said free-to-view digital satellite TV was ripe for development.

The BBC said: "Our proposals also have a vitally important longer term benefit – they open the way for satellite to play its full role in the digital marketplace. Up until now, satellite has been developed primarily as a pay-TV service. This has limited its appeal to viewers who are not attracted to pay."

The BBC is a partner with Sky in the new Freeview digital terrestrial TV service but the announcement yesterday appeared to show that relations between the two organisations had badly deteriorated.

The corporation's carriage contract with Sky was due for expiry in May and it has been locked in renewal talks for the past 18 months. Public service broadcasters pay Sky for encryption, so that the correct regional services are broadcast and the signal does not "bleed" into other countries.

The BBC said it no longer needed Sky because there was a new satellite which beamed mostly towards the UK. Satellite tends to be seen as the domain of Sky's pay-TV service but around 1 million households already watch satellite TV in Britain without a Sky subscription. Free satellite will also reach the 25 per cent of the UK that cannot receive Freeview.

The BBC said: "This could lead to the development of a vibrant free-to-view market in satellite, just as there is now a free-to-view market in digital terrestrial television following the launch of Freeview."

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