ITV and BSkyB Haggle as BBC Mulls Satellite Service

19 November 2004

British state broadcaster, the BBC, is set to move into satellite transmissions if current negotiations between NewsCorp's UK satellite operation BSkyB and ITV - the nation's largest commercial network - end in stalemate.

The ITV-Sky talks have reached a crucial stage, according to insiders, although the lips of both sides are firmly zipped. At stake is the fee - currently £17 million ($31.47m; €24.24m) - annually that ITV pays BSkyB to encrypt and transmit its two channels ITV1 and ITV2.

Encryption is a key element of the Sky service as it limits reception of ITV's broadcasts elsewhere in Europe - essential in such areas as broadcast soccer rights and the airing of movies.

Moolah is the issue that separates the two media mammoths. BSkyB has offered a £4m cut in its current fee, reducing this to £13m - still well above the single digit sum ITV is seeking. Negotiations reach their eleventh hour this weekend.

Meantime, waiting in the wings is the BBC which, fired by the success of its Freeview terrestrial digital platform [WAMN 18-Nov-04], is eager to extend the concept to satellite transmissions. If Sky and ITV are unable to strike a deal, the BBC's FreeSat service becomes a viable option.

But despite expectations that five million UK households will have adopted the service by Christmas, Freeview has a serious shortcoming: its signals reach only 75% of UK homes. FreeSat, which the BBC has registered as a trademark, could fill that gap.

The BBC is eager to start the countdown. Its director general, Mark Thompson, told a parliamentary select committee last month: "One of the reasons why Freeview works so well is because there are a lot of companies offering boxes, and that's helped drive prices down. We'd like to see that sort of market, where consumers have real choice opening up in free satellite."

  • Government Hikes TV Licence Fee
    UK culture, media and sport secretary Tessa Jowell told the House of Commons Thursday that the annual TV licence fee will rise above the rate of inflation as of April 2005.

    The present fee of £121 will rise by £5.50 to £126.50. In a written statement Jowell said: "The television licence fee settlement is designed to enable the BBC to provide a strong and distinctive schedule of high-quality programmes and remain at the forefront of broadcasting technology."

    The settlement also requires the corporation to raise over £1bn through efficiency savings and increased income over the next five years.

    Data sourced from and Brand Republic (UK); additional content by WARC staff