Sky plans Channel 6 to compete with rivals on Freeview

Sky Television admitted publicly for the first time yesterday that it has plans to launch a mainstream terrestrial channel to take on BBC1, ITV, Channel 4 and Five.

Richard Freudenstein, chief operating officer for BSkyB, said his company would start what rivals are calling Channel 6 if viewers increasingly turned to Freeview, the £99 digital TV set-top box, instead of choosing to have a dish on their roof. "It absolutely makes sense," he told the BBC director general, Greg Dyke, in a debate at the Royal Television Society's convention in Cambridge.

Rupert Murdoch, whose global News Corporation company is the largest shareholder in Sky, is long thought to have had ambitions to gain a foothold in terrestrial broadcasting.

There have been consistent rumours in the television industry that he would like to own ITV, but he is prevented by law from doing so. However, the Communications Act, which received Royal Assent two months ago, does not rule him out from ownership of the smaller Channel 5, now known as Five.

Dawn Airey, managing director of Sky Networks, said yesterday that Sky "is not interested in buying Channel 5".

But media analysts suggest a new Channel 6 on Freeview may provide an easier way into the mainstream market.

Sky would launch its new entertainment channel by revamping and renaming its little-watched channel Sky Travel, which currently airs on Freeview. With a big cash boost, it could be positioned as a direct rival to the traditional commercial terrestrial channels and BBC1.

Though such a fundamental shift in the channel's focus would require approval from the new broadcasting watchdog Ofcom, a Sky insider considered such approval a foregone conclusion "if the new channel is legal and decent - which it would be". Already Sky Travel broadcasts shows that take a very liberal interpretation of the channel's remit, such as the down-market documentary Ibiza Uncovered and the reality show Temptation Island.

Viewers using Freeview have access to 30 channels - but none of the main entertainment offerings from Sky, which has virtually boycotted it in an attempt to drive customers towards its own satellite system.

A Sky insider said the new channel - "Sky something or other, we certainly won't call it Channel 6" - could be launched in less than five years. Sky would move into the market "when Freeview is in around 8 million homes", he said.

Observers suggest the move could come even before that target is met. There are more than 2 million homes with Sky dishes at present, but executives at the network would be reluctant to let a rival platform get to 8 million customers before taking drastic action.

Ms Airey said that talk of a new channel was "hypothetical" but added that if Freeview grew rapidly "of course we will consider doing something on it".

The channel would also be carried on satellite and cable, to avoid disenfranchising customers with Sky dishes.

Freeview is in 2.3 million homes but has enjoyed incredible growth lately - 800,000 receivers were sold in the past quarter, and 25,000 boxes are being bought every week.