ITV FTA decision: Not before April...

Jane Martinson, media business editor
Wednesday April 27, 2005
The Guardian

ITV has turned to former BBC director general Greg Dyke for help in its regulatory battle against BSkyB amid early indications that industry watchdog Ofcom may find in favour of the satellite group.

Although no final decision has been reached, Ofcom has indicated it believes a central plank of ITV's case - an earlier deal between the BBC and Sky - may not be relevant.

This initial view, delivered verbally, comes three months after negotiations between ITV and Sky over how much the satellite operator charges the broadcaster to appear on its service reached a deadlock and ITV referred the matter to Ofcom.

However, a source with knowledge of the talks said: "The battle isn't over. Only the first round has gone to Sky."

In particular, ITV's lawyers hope to use testimony from Mr Dyke, who wrote extensively about his negotiations with Sky in his book, Inside Story.

Ofcom, ITV, Sky and Greg Dyke all declined to comment yesterday.

Ofcom is still investigating the complaint and ITV hopes to convince the regulator with further submissions from Mr Dyke and others. A final decision is not expected until the end of May and industry analysts believe ITV and Sky could reach a deal before then.

However, early signs suggest that Ofcom's first investigation into Sky may continue its reputation for never having lost a regulatory battle.

The case revolves around whether the amount Sky charges ITV1 to have its services encrypted and shown nationally on channel 103 are "fair, reasonable and non-discriminatory terms".

A central plank of ITV's case is that the deal agreed between Sky and the BBC in 2003 set a precedent for their own contract with the satellite group.

Under this deal, the BBC is thought to pay about £4m to ensure that regional versions of BBC1 and BBC2 appear in Scotland, Wales and Northern Ireland. The BBC's main channels were also given slots on Sky's electronic programme guide (EPG) of 101 and 102. The deal marked the decision by the BBC to go "in the clear" rather than pay for full encryption.

In contrast, ITV pays Sky £17m a year for full conditional access and encryption services, which it argued was discriminatory.

However, Ofcom executives have indicated that the BBC's deal was a "rollover" relating to the corporation's existing relationship with Sky rather than a new deal.

ITV advisers were surprised by this preliminary finding, given the bitterly fought negotiations between Sky and the BBC. So the commercial broadcaster turned to the former director general for his knowledge of the BBC/Sky negotiations.

In his book, Mr Dyke outlines how he decided to withdraw from the Sky service and broadcast the BBC's digital channels "in the clear" after balking at the amount the satellite group wanted to charge.

After referring the matter to the regulator, the two sides reached a last-ditch compromise in which the BBC still had to pay to have its channels listed on EPG and regionalised.

In its submission to Ofcom, ITV has argued that the £4m a year the BBC is believed to pay Sky for this regionalisation deal should be a benchmark for a similar service for ITV1.

Sky offered to lower slightly ITV's fees for regionalisation - thought to be about £13m - but this figure was rejected by ITV before its decision to go to Ofcom for arbitration.

The row could have wider implications if ITV decides to broadcast its channels without encryption, as this would allow it to team up with the BBC and launch a satellite version of popular digital service Freeview.