A blow to Brit basic

Cable, sat rules to alter channel packaging

LONDON — The Independent Television Commission has paved the way for a radical restructuring of the way cable and satellite TV channels are sold to British viewers.

New guidelines from the regulatory org will see the practice of minimum carriage requirements end Jan. 1, 2000.

Under the old system, deals between programmers and distributors guaranteed niche TV channels carriage to at least 80% of cable or satellite customers.

Now, subscribers will select the channels they buy rather than being forced to take a “big basic” package of about 40 services, many of which they may not want.

But despite some provisions in the new rules that soften the blow for TV programmers, there is a fear that unbundling channel packages leaves underperforming channels vulnerable to market forces.

As a consequence, some programmers say, the ITC’s mandate to bring more choice to the viewer will be undermined by channel closures.

The ITC had been under intense pressure — most notably from Universal and Viacom — to maintain the status quo. One industryite said unbundling now made the U.K. an unattractive investor’s market.

Distributors, however, celebrated the changes. The cable industry sees unbundling of packages as crucial to building its penetration, which is still hovering at about just 23% in Britain.

Barclay Knapp, chief exec of the U.K.’s third largest cabler, NTL, told Daily Variety: “I think (the ITC) have done a marvelous job. They seem to have balanced the other interests.”

BSkyB chief exec Mark Booth said this “effectively gives the green light for Sky to launch digital with innovative, tailored and highly competitive packages which will be of benefit both to Sky and all television viewers.”

Under the ITC’s revamp, minimum carriage requirements (MCRs) will be prohibited come 2000, but cable-only channels — of which there are six — will be allowed to retain their original distribution contracts for a transitional period.

The contracts will be phased out, but the ITC will consider the time frame on a case-by-case basis.

This should ensure that threatened litigation against the ITC — notably from the quirky news and entertainment channel L!ve TV — is at least on the back burner.

L!ve said it was “very, very happy” and expects its 100% carriage deal to run until its contractual end in 2005.

The new rules also stipulate that as of July 1 this year, MCRs in new or extended contracts will not be acceptable. As well, MCRs will not be allowed in any digital carriage contracts for existing channels.

New channels, however, will be granted a 12-month startup period during which minimum carriage requirements would be accepted.

Lastly, as of Sept. 30, all premium channels — such as satcaster BSkyB’s Sky Sports — must be available to subscribers individually over any basic channel package.