BBC Says It Might Start Charging BSkyB for Channels

Ed Vaizey - H 2012
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While U.S. pay TV operators have been paying broadcaster retransmission fees, BSkyB currently receives fees from British broadcast networks.

A BBC top executive has warned BSkyB that the U.K. public broadcaster could start charging the pay TV giant retransmission fees for carrying BBC channels.

U.S. broadcast networks have in recent years started receiving such fees from cable and satellite TV operators, giving them a new revenue stream that mirrors the carriage fees cable channels receive.

But in the U.K., business models have been different. BSkyB charges the BBC and other broadcasters, such as ITV, Channel 4 and Channel 5, for offering their channels. The BBC, for example, is estimated to pay about $8 million (£5 million) per year to BSkyB. Other British public broadcasters combined are thought to pay about the same amount.

While those fees have declined in recent years, the British TV industry and politicians have recently been discussing possible changes.

U.K. culture secretary Ed Vaizey earlier this year called on BSkyB to give up on fees from broadcasters or risk possible regulation.

Vaizey is expected to meet BSkyB executives this week to discuss the topic of fees amid the continuing industry debate, the Financial Times reported.

James Purnell, a former British culture secretary in a Labour Party government who was recently named director of strategy and digital at the BBC, has made the issue of retransmission fees a bigger priority, according to the FT.

"This free ride needs to stop," cited John Tate, director of policy and strategy at the BBC, as saying on Wednesday. The paper said he also signaled the BBC could itself start charging BSkyB retrans fees, but it didn't provide further details.

A spokesman for BSkyB, in which Rupert Murdoch's News Corp., owns 39 percent, reiterated that the BBC gets much value from having its channels on BSkyB though. The company has more than 10 million TV homes.

“The BBC directly benefits from the billions of pounds we’ve invested in our TV platform and the technical services that support the 49 channels they run over the Sky platform,” said the BSkyB spokesman. “These payments are no different to paying for electricity, studio facilities or any other operational costs" and cover BSkyB's technical transmission costs, he added about the fees charged to the BBC.

BSkyB has also said that current regulations require it to continue offering the broadcast networks to people even when they cancel their BSkyB pay TV subscription.

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