Sky responds to BBC withdrawal

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Sky is "looking forward" to negotiating with the BBC for partial usage of its Conditional Access System, the company said in a statement this afternoon.

Earlier today the BBC announced it would be ditching the system and going in the clear on Astra 2D. Such a move will result in an £85m revenue loss for Sky over the next five years.

In order to present viewers with their own regional version of BBC One and BBC Two, the BBC will have to make use of one aspect of the system, however, for which it has offered Sky "a fair price, including a profit margin."

"Digital satellite is an open platform so channels can choose whether to broadcast unencrypted or take up Sky's offer of conditional access services on fair, reasonable and non-discriminatory terms," said a Sky spokesman this afternoon. "The BBC's proposals mean that all digital satellite viewers would continue to receive its channels and Sky looks forward to negotiating charges with the BBC for the technical services it is requesting."

If an agreement cannot be reached, the BBC says it will go it alone if necessary.

Meanwhile. ITV applauded the BBC's decision, hinting that it could follow suit when its contract expires next year.

"We understand entirely why the BBC has felt it necessary to take this course of action and wish them every success," said Clive Jones, joint MD of ITV. "The public service broadcasters have long argued that the price Sky charges for conditional access is too high. ITV currently needs Sky’s conditional access facilities in order to deliver the best regional service to viewers.

"However, the £17 million per annum ITV pays for this service bears no relation to the actual cost of the service - which we estimate to be no more than a few hundred thousand pounds – and is in stark contrast to the other two digital platforms who provide viewers with the right regional variant of our channels at no extra cost.

"This is the fault of a regulatory regime that allows a dominant market player to extract monopoly prices from customers without fear of recourse from the regulator. We hope the BBC’s announcement will focus the minds of peers on this issue as the Communications Bill enters the House of Lords. We are calling for an amendment to the Bill that will require OFCOM to take account of the particular nature of public service broadcasters and their obligations to viewers when deciding whether Sky’s charges are appropriate.

"We are happy to pay a fair rate to Sky, but if we have to divert millions of pounds from on-screen investment to underwrite Sky’s Pay-TV business it is viewers who will ultimately lose out.

"ITV’s current contract with Sky for conditional access services runs until Autumn 2004. In the meantime we will review all options and follow developments with interest."

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