BBC News nabs major cable deals

LONDON — The BBC has secured carriage for its new 24-hour news channel with the U.K.’s cable industry, a move that will give it access to 2.2 million homes in Britain and could severely impact rival Sky News.

Deals are in place with the country’s largest and second-largest operators, Cable & Wireless Communications and Telewest, as well as NTL and General Cable, companies which in total represent 2 million households. Negotiations with the remaining British cable operators are also under way and should be completed by the end of the weekend.

It is being offered free to the cable industry — it’s funded entirely by the license fees Brits pay annually to the pubcaster — and will also be available terrestrially and on satellite when digital launches.

The BBC news service will launch early in November and will enter a cable news market already crowded with Sky News — the channel Rupert Murdoch set up to combat CNN Intl. — European Business News, Bloomberg TV, CNBC and Euronews.

Should the BBC channel prove a success, it could forever relegate Murdoch’s dream of Sky News as an international service on par with CNN — as it was when it was the designated news channel in the White House in “Independence Day” — to the dust bin.

Not only is Murdoch’s ASkyB for the U.S. not going to happen, but Sky News could devolve into nothing more than a niche channel. It has never been much of money-spinner for British Sky Broadcasting and is considered a prestige service close to Murdoch’s heart.

Too pricey?

The U.K. cable industry has expressed dissatisfaction with the price of Sky News, which costs cable operators 74¢ per subscriber — a price that BSkyB is proposing to raise to 79¢ per head. Of all the news services provided to cable, Sky News is easily the most expensive.

Some observers believe cable operators could dump Sky News once the BBC service becomes available, with some analysts predicting Sky News’ potential loss to be in the region of 1.5 million homes. Under current regulations, almost all operators can legally give BSkyB a mere 60 days’ notice before pulling the plug.

One cable exec, however, poured water on the Sky-News-is-doomed theory, saying that the channel has little to fear in the short term while the BBC service establishes itself, and that operators would be “fearful” of upsetting BSkyB by dropping Sky News because the satcaster provides the cable industry with its key programming, movies and sports.

There is also speculation that BSkyB will seek legal action through the European court on the basis that the BBC providing a free news service in anti-competitive.

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