Rupert Murdoch buys into Channel 5

After years of trying, Rupert Murdoch, the satellite television and newspaper baron, is about to be awarded a small but valuable foothold in British terrestrial TV.

Rivals are becoming increasingly worried that his move is going unchallenged and that if, as seems likely, it is successful, he will straddle satellite and ordinary terrestrial broadcasting.

Mr Murdoch has bid far in excess of his nearest rival for the right to run teletext on the new Channel 5. He has formed Sky Five Text, a joint venture between BSkyB and Channel 5, to buy the teletext licence. At pounds 1.5m, Sky Five's offer is five times higher than the only other bid, of pounds 313,000 from Teletext Limited, which operates the text services on ITV and Channel 4.

The size of the bid, say Murdoch watchers, is indication of his determination to gain an entree into the new channel. They point out that it is not much less than he was prepared to pay to run the whole channel in 1995. That bid failed but two years later he is back, in a partnership with the station itself.

"It is a foothold in terrestrial TV," said Derek Terrington, media analyst at stockbrokers Teather & Greenwood. Mr Murdoch was "probably hedging a lot of bets" on the radical changes taking place in British broadcasting with the coming of digital, and wanted to keep his options open. But, Mr Terrington stressed, Mr Murdoch would also be attracted by the immense profitability of teletext.

Around 18 million people now have the service on their sets. Last year, Teletext Limited made profits of pounds 8m on turnover of pounds 35m, the "best margin anywhere in British broadcasting" said Mathew Horsman, media analyst with Henderson Crosthwaite.

Within ITV and Channel 4, Mr Murdoch's latest move is viewed with suspicion. "He originally made a bid of pounds 2m for Channel 5, now he is coming back and making a very hefty bid for teletext on the same channel. You have to ask yourself, why?" said a former director of an ITV company and now a consultant to several stations. "There is concern that here is the last licence to be awarded under the old analogue [as opposed to digital] system in British TV and here is Rupert coming in through the side-door and securing it. The spectre that is worrying people in ITV is of a very affluent Channel 5 operation with Rupert inside it. He could wreak havoc by being on the inside of bids for sports events, for example."

A spokeswoman for the Independent Television Commission, the licensing authority, said Mr Murdoch's proposal fell within the ownership regulations. A final decision, she said, would be announced in May.

At BSkyB, a request to discuss the teletext bid was referred to Channel 5 where a spokeswoman would only say that a separate company had been set up by the two channels to mount the application.

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