The BBC has infuriated Murdoch-controlled BSkyB by announcing without warning the withdrawal of its digital channels from the latter’s satellite system as of May 30.

In a decision with potentially huge ramifications, BBC director general Greg Dyke has ordered that the Corporation switch its digital satellite signal from Sky’s conditional access system to a new satellite system that pinpoints its beam on the UK.

The publicly funded media giant has hitherto paid Sky – 35.4%-owned by Rupert Murdoch’s News Corporation – to scramble and transmit its channels. Such signals must be encrypted to protect programme rights, since the satellite’s broadcasts are available outside the UK.

However, when the existing contract with Sky expires on May 30, the BBC will send its digital signals via the new Astra 2D satellite, whose beam is focused on Britain and Ireland. These signals, says Dyke, will not need to be encrypted.

“We have the opportunity to move all our services to a recently-launched satellite whose signal is aimed at the UK and Ireland and will not spill over into the rest of Europe,” he revealed. “This means many of the rights problems we would have had on the existing satellite disappear.”

Sky subscribers will still be able to pick up the BBC’s channels via their dish, though whether BBC1 and BBC2 will keep their coveted positions as the first two stations on Sky’s electronic programme guide is still being discussed.

Dyke argues the move will save the BBC £85 million ($136.5m; €125.6m) over five years (the estimated price of renewing the current contract), though Sky claims this figure is too high. The money saved will be used to widen access to the Corporation’s digital channels.

More important than the cash, however, is the precedent of digital satellite broadcasting without Sky’s encryption service. The BBC’s progress will be closely followed by other digital broadcasters – a fact recognised by Dyke, who claimed the sector could “break free of the straitjacket of subscription.” Sky will be hoping other large TV broadcasters such as ITV and Channel 4 do not follow suit.

But the move is not without its risks. A report on claims Astra 2D’s signal is not as tightly focused as Dyke claims, with spill-over in some parts of continental Europe. Were the BBC to broadcast unencrypted sports and movies, it could find itself on the wrong end of a lawsuit from various rightsholders.

Data sourced from: multiple sources; additional content by WARC staff