LONDON — Carlton Communications and Granada Group have agreed to pay British Sky Broadcasting £75 million ($123 million) to compensate for its enforced withdrawal from their three-way partnership to launch digital terrestrial TV in the U.K.
The deal leaves the British Digital Broadcasting consortium, now a joint venture between Carlton and Granada, as the hot favorite to win all three digital terrestrial licenses, which will be awarded today by the Independent Television Commission.
The ITC had warned BSkyB that its equity involvement in the digital terrestrial bid would prevent the group from winning a license. The ITC wants to use digital terrestrial as a way of introducing more competition into the U.K. pay TV market, which currently is dominated by BSkyB’s satellite channels.
However, BSkyB still will be able to supply its premium sports and movie services to BDB, and the settlement with Carlton and Granada includes an improved carriage deal for Sky Sports, Sky Movies and Sky One.
BSkyB will receive the $123 million payment for its equity stake only if BDB is awarded all three licenses. The only rival bidder is Digital Television Network, backed by the U.S.-owned transmission company NTL, but the ITC reportedly is concerned about whether that group has sufficient financial muscle.
Six blocks of frequencies, or “multiplexes,” have been carved out for digital terrestrial broadcasting. Three of these are being offered to commercial bidders, while the other three have been allocated to the existing terrestrial webs. The ITC is hoping to announce its decision concerning the three available multiplexes by the end of June.