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Last week, the BBC said that it could save £50m over five years if Sky waived the cost of carrying the BBC channels on its platform, enabling the corporation to reverse cuts to some services in the Delivering Quality First austerity plan.
In a blog post published last night, Sky's group commercial director Rob Webster defended the £10m a year cost imposed for making the 49 BBC TV and radio channels available to more than 10m Sky subscribers.
"[The BBC] believes Sky should provide it with a multi-million pound subsidy, with the bill footed ultimately by Sky customers who've already paid the licence fee," said Webster.
"Of course it's understandable that tight budgets mean the BBC is seeking to save money where it can. But can it be fair that, of all the BBC's suppliers, Sky should be singled out and asked to offer a free ride? We think not."
Webster noted that the BBC, ITV and Channel 4 benefit from guaranteed access to the Sky platform under UK legislation, enabling them to reach millions of homes and launch various digital channels over the years.
Sky has invested over £1bn in its satellite platform over the past decade and Webster said that it is "only right that each broadcaster should pay a fair and proportionate share of the costs if they want the benefits".
Since 1998, broadcasters have paid Sky a carriage contribution, regulated by Ofcom, for using the platform, covering all listings on the electronic programme guide (EPG), regionalisation (ensuring regions get the right version of BBC One and ITV1), and access to interactive functionality.
The BBC is now lobbying for a change to the rules so that public service broadcasters (PSBs) do not have to pay the carriage costs. It has even been argued that platform holders such as Sky should pay for the privilege of offering channels such as BBC One and ITV1, just like in the US.
Webster said that the PSBs rely on Sky to reach around a third of their audience, while the commercial broadcasters need the "many millions of eyeballs translate into serious advertising revenue".
But the BBC and other public service channels are not offered as part of a Sky pay-TV package, meaning they are still widely available if a customer cancels their Sky subscription and moves to Freeview, Freesat or other TV platforms.
Webster noted that this is different to the US where the cable operators pay retransmission fees to the big networks strictly because they make those channels exclusively available as part of their subscription packages.
Webster claimed that the transmission costs should be considered no different to the money spent by the BBC on electricity, office space and other essential services.
"All broadcasters understand that distribution is a necessary cost of doing business. For the BBC, for example, our current platform charges of £10 million represent just a small fraction of the £181 million that the corporation spends annually to distribute its TV and radio services," he said.
"And that's an investment which enables it to serve the 40% of licence fee payers who choose to access the BBC over the Sky platform. That's just £1 per Sky home per year to distribute dozens of channels and radio stations. Or put another way, just three pence per home per day."
He added: "When you put aside the rhetoric, those distribution costs are no different to paying for electricity, studio facilities or any other services.
"No-one expects [satellite provider] Astra to provide the BBC or the other PSBs with free satellite transponders or British Gas to provide them with cheap energy, subsidised by its other customers. In these examples, the PSBs pay the same rate as everyone else and do not expect, nor receive, a subsidy. So why is Sky, as a supplier of platform services, any different? The answer is we're not."
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