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to ax BBC competitor to BSkyB
Tycoon drops opposition to digital license fee
By Simon Bond
The UK government is reported to be planning to scrap the BBC's controversial digital channel, News 24, as part of a backroom deal with Rupert Murdoch's pay-TV company BSkyB.
The story was broken by London's Financial Times in the wake of growing unease about the relationship between Tony Blair's government and Murdoch's media empire in the UK.
According to the reports, the UK government believes that BSkyB will drop its opposition to the proposed digital TV license fee if the BBC's News 24--a rival to Murdoch's Sky News channel--is closed down.
BSkyB is part of an alliance of commercial broadcasters who are opposed to the introduction of an extra license fee for viewers of digital television services.
The alliance believes that the extra tax on viewing the new digital channels will stifle growth and slow down the acceptance of digital TVs and set-top boxes.
Gavin Davies, the government's own consultant on the future of BBC funding, proposed the digital license fee last year as a way to raise funding for new programs to attract viewers to digital. However, Davies' proposals have caused an outcry in the TV industry.
Now, BSkyB's influence over government broadcasting policy is set to be under close scrutiny again following the Financial Times' revelations.
The close relationship between the present government and BSkyB goes back to before their election win three years ago when soon-to-be Prime Minister Tony Blair flew to Australia to court Murdoch's support.
Murdoch obliged and swung the support of his UK newspapers behind Blair's campaign. This included the UK's top-selling tabloid, The Sun, which--as a reminder of where the dues should be paid--ran the headline 'It was the Sun that Won It' on the morning of Blair's election victory.
Since then, Murdoch and the Blair regime have been linked over a $30 million sponsorship of the London Millennium Dome and some useful decisions over an anti-competition investigation into the competing French media group Vivendi.
The digital license fee is BSkyB's latest concern. The government has been considering a two-tier fee that would see the introduction of a small digital levy and a slight increase in the current analogue charge to fund the BBC.
However, last month's government consultation into the introduction of the charges attracted over 500 representations, of which 97 percent were against the fee and just 2 percent in favor.
Chris Smith, the government minister is charge, is expecting to make his decision in February. He is known to want News 24 off the air. And given the weight of opposition to the fee, the BBC maybe forced to concede the channel as a pre-condition to securing the license fees it wants to fund its other digital ventures.
Whether the scrapping of News 24 alone is enough for BSkyB to support what will amount to a tax on its customers is unknown. However, with crucial negotiations underway for the future TV rights for UK premier league soccer, there is plenty of scope to 'even-up' the deal.
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Simon Bond covers European Media for Media Life, writing from outside of London.