Murdoch Digital Television Alliance Appears To Be Crumbling

The digital television alliance between Bertelsmann, Canal Plus, Havas and British Sky Broadcasting has collapsed according to reports in the national press, although BSkyB would not confirm this when MediaTel spoke to them earlier. Bertelsmann said on Wednesday that BSkyB, controlled by Rupert Murdoch’s News Corporation, had unreasonably pulled out of the deal.

Canal Plus and BSkyB have accused Bertelsmann company of dragging its feet on preparations for the introduction of digital TV in Europe. “When we have a marriage, we think it should mean something,” a source at Canal Panel said. “You don’t wander off with someone else after you exchange vows.”

Only weeks after the pan-European alliance was announced in March, Bertelsmann unveiled a controversial merger of it TV interests with CLT, the Luxembourg-based broadcaster that competes directly with Canal Plus in key markets.

Rupert Murdoch sent a letter early this week to Bertelsmann asking for clarification of the company’s intention regarding the alliance. Mr Murdoch is believed to be particularly concerned about the effects the CLT link could have on regulators in Brussels, who have already expressed reservations about large-scale alliances in the media sector.

Bertelsmann officials said Mr Murdoch withdrew because it was unclear what role Premiere, Germany’s only pay-TV network would play. Premiere, owned jointly by Bertlesmann, Canal Plus and the Kirch media group, was crucial for the success of the alliance since it would have provided a ready-made audience of more than 1m viewers.

Bertlesmann also said it had received warnings from Brussels that the European Commission might block a digital television alliance headed by Mr Murdoch, on top of this Kirch is pushing for its own decoder as a rival to the one currently being used by Canal Plus. Analysts said that a battle between the two standards could imperil the profitability of digital TV.