Satellite subscriber battle hinges on ITV

net1

ITV and BSkyB are in the final stages of negotiations that could determine whether there is a BBC-backed satellite version of Freeview in the UK. ITV has until this weekend to renew its contract with the pay-TV group governing how and where its services are seen by satellite subscribers.

At stake is the £17m a year that ITV pays BSkyB to encrypt ITV1 and ITV2 and beam them on to the Sky Digital platform. The ITV channels are scrambled and beamed to 7.4m BSkyB dishes, where the signal enters a set-top box in living rooms. The box unscrambles the signal if it has the correct decryption card inserted.

BSkyB technology stops satellite viewers in mainland Europe and the Republic of Ireland from picking up ITV broadcasts and ensures that the correct regional service is seen by ITV viewers.

The negotiations are being keenly watched by the BBC, which wants to launch "Freesat", a satellite broadcasting package for viewers who want more channels than the 30-odd offered by Freeview but refuse to pay a monthly subscription.

Freeview is backed by the BBC, BSkyB and the transmission company Crown Castle. The BBC took a big step towards setting up its own satellite platform last year when it scrapped its encryption deal with BSkyB, a necessary precursor to setting up a rival service.

If ITV also tears up its encryption contract, Freesat could become a reality. Freesat would involve buying a self-install set-top box and satellite dish from a retailer. Once installed, the service would provide all the television channels that are not encrypted by BSkyB: some 140 stations, plus dozens of radio services.

BSkyB and ITV would not talk openly about the contract because negotiations are at such a critical stage. Industry speculation puts BSkyB's latest offer at £13m - £4m less than the current deal - but ITV is holding out for a single-digit figure.

Price is just one of the issues at stake. ITV must decide between paying for an encrypted service or following the BBC's lead and broadcasting unencrypted, or "in the clear" in industry jargon.

The benefits of signing another deal with BSkyB are two-fold. First, encryption protects the rights deals for premium programming such as Champions' League football matches, formula one racing and Hollywood films. Second, encryption allows broadcasters to target regional audiences. This is particularly important for ITV as it needs to fulfil its requirements for regional programming under the terms of its broadcasting licences.

Also, a large chunk of its advertising is targeted at regional audiences, or is derived from regional advertisers. So both advertisers and programme-makers have a vested interest in ensuring that viewers in the central belt of Scotland, for example, receive the right service.

The BBC faced a similar problem when it quit the Sky Digital platform last year. Under a new deal with BSkyB - which costs several million pounds a year - BBC regional channels still appear on the Sky Digital onscreen channel menu. ITV is expected to strike a similar "regionalisation" deal if its broadcasts become unencrypted.

Few analysts believe that ITV will continue paying £17m a year to BSkyB for encryption. In a note to investors, Kingsley Wilson, analyst at Investec Securities, said: "We suspect that ITV will... not renew the contract, but even if it re-signs, we would expect the fee to be substantially lower than it currently pays."

net1

UPDATE:
It has been announced that a 2 month extention has been made between Sky and ItV with its present contract, which was due to run out this Sunday.
there'll be no news on Sunday. During that time, we'll carry on negotiating," said ITV's managing director, Mick Desmond. "ITV and Sky have reached a temporary extension over conditional access arrangements relating to digital satellite distribution of ITV1 and ITV2," he said. "As a result ITV1 and ITV2 will remain encrypted for the time being.

gameboy

[QUOTE=net1] Good news - that's exactly what happened before the BBC left.

My opinion is that Sky will have to compromise a lot to get ITV to stay. ITV News and ITV 3 are already FTA.

ITV pay £17 million BBC pay £2 - some sites say Sky has to offer ITV the same deal under OFCOM rules.

Only he who does nothing, does nothing wrong.

dynamo985

good news for all imo