Reuters Teams With Sky News

Reuters Holdings, the U.K.-based news and information group, has agreed to a news output deal with Sky News, the loss-making, 24-hour British Sky Broadcasting satellite news channel.

The announcement came after weeks of speculation and follows a year of talks with several potential Sky News partners, including CBS and the U.K.’s Independent Television News.

Reuters’ new British partnership with Sky News, whose main shareholder is Rupert Murdoch’s News Corp., comes less than two weeks after the Murdoch-owned Fox Television revealed it is developing a U.S. news service in partnership with Reuters.

A further deal involving Reuters and the Murdoch-owned Star TV, based in Hong Kong, is believed to be in the cards.

Under the terms of the agreement with Sky, which takes effect in April, Sky News will retain editorial control of its coverage while Reuters will supply and manage British and international newsgathering for the news net.

Reuters also will produce several half-hour weekly programs for Sky News. Up to 100 jobs are expected to be lost at Sky News’ West London HQ as a result of the alliance with Reuters.

Reuters’ contract with BSkyB is reckoned to be worth in the area of &pounds;12 million ($18 million). It will result in significant savings for the satellite company, recently launched on the U.K. stock exchange.

Sky News is currently understood to cost BSkyB up to &pounds;30 million ($45 million) a year but yields little advertising revenue.

Murdoch, however, has always believed the news channel provides BSkyB with political cachet.

Neither side would disclose financial details. David Kogan, director of Reuters Television, said: “Sam Chisolm (BSkyB’s CEO) always drives a hard bargain but I like to think we do too. This is a win, win relationship.”

In a statement, Chisolm said the Reuters link provides a platform for the global expansion of Sky News. But details of the news channel’s international plans remain sketchy.

Sky needs to make up a lot of lost ground if it is to compete effectively with CNN and British Broadcasting Corp., which last week launched BBC World, the pan-European news channel, in tandem with blue-chip media group Pearson.

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