Updated: BBC pulls out of 'Neighbours' negotiations?

BBC chiefs have pulled out of negotiations for Australian soap Neighbours, according to a report in The Mirror today.

The show will now leave BBC screens next year after distributor Fremantle refused to accept the corporation's offer of £70,000 per episode, instead demanding that executives match ITV's bid of £104,000.

It is now believed that the bidding war for the soap will continue between ITV and Five. ITV are keen to secure a daytime hit after struggling since Paul O'Grady defected to Channel 4 in 2006, while Five are hoping to create an Aussie soap hour by running Neighbours and Home and Away back-to-back.

A BBC insider told the newspaper: "We made a very generous offer and we were very disappointed when they went off in search of more cash. It shows how greedy they are. There is no hope of us keeping the programme in the face of such fierce competition from the commercial channels.

"We can't pay over the odds for it because it is licence fee money - but what we did offer was very reasonable given the current market rates. It is very sad."

A BBC spokeswoman, however, told DS this afternoon that "negotiations are still under way."