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Telewest and BSkyB in fee deal

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Cable operator Telewest yesterday claimed to have reached a new agreement with BSkyB over the rate at which it can sell the satellite operator's premium sports and movie channels.

The office of fair trading is examining the proposal and could give approval within the next month, Telewest managing director Charles Burdick said.

"It's a win-win deal for both sides. It contains the necessary incentives for us to market Sky's channels and will be valuable to them."

Only 300,000 of Telewest's 1.3m cable television customers take Sky Sports or Sky movie channels but the deal will allow them to be sold at a discount and the cable firm to make a healthy profit.

Mr Burdick said the extra demand generated would lift the average amount spent each month by a Telewest customer from £42 to £47.

Regulators had warned BSkyB that it "abused its dominant position" in setting prices paid by other pay-television operators for its premium channels but backtracked following a lengthy investigation.

According to results released yesterday, Telewest lost 20,000 television and 13,000 telephony customers in the three months to March 31 as the effect of the group's ongoing financial restructuring weighed on its ability to hold on to subscribers. Broadband internet customer numbers rose to 310,000.

The group is attempting to eradicate £3.5bn of its £5.3bn debt by handing control of 97% of the company to lenders, but it will not comment on the likely completion date of a deal that could drag on until late summer.

Lower spending on cable investment and interest payments, aligned with job cuts, enabled Telewest to generate positive cash flow for the first time.

Pre-exceptional core earnings climbed 15% to £105m, while turnover was flat at £335m. Net losses increased by 13% to £187m.