Sky 'suspends' proposed Picnic service

Sky has announced an immediate suspension of its preparations to launch a subscription TV service on digital terrestrial television.

Plans for the service were first confirmed in February 2007 and it was publicly unveiled as Picnic the following October.

Under the Picnic proposals, Sky's channels on Freeview - Sky News, Sky Three and Sky Sports News - would have been replaced with three encrypted streams making Sky Sports 1, Sky Movies, Sky One, a factual channel from Discovery and a children's channel from Disney available at different times of the day. Sky also planned to seek approval from Ofcom to use the newer MPEG-4 compression standard - which will now be used on a reconfigured multiplex B to carry high definition public service channels - for a 24 hour stream of Sky News.

Ofcom confirmed that it would consult on the proposals within days of the original announcement. Despite early reports that Sky was reconsidering the plans in light of the removal of its basic channels from Virgin Media, Sky pressed on and in March 2007 Ofcom said it would investigate on competition grounds and roll its inquiry into its larger consultation on the future of pay TV in the UK.

This April, Sky indicated it was looking at using IPTV to deliver Picnic to homes while awaiting Ofcom approval for the digital terrestrial service. As recently as July, Sky was said to be seeking marketing firms for the service's launch; however, a spokesperson today said that the plans had been suspended.

"We want to invest in Picnic because it will be good for consumers and a good opportunity for Sky," the spokesperson said. "But the blunt truth is that Ofcom has spent 18 months looking at our proposals and there is no end in sight. The Picnic team have done everything they can to prepare for launch and there’s nothing left to be achieved until Ofcom makes its mind up. While regulation works at its own pace, no business can go on like this indefinitely so we’ve had to take some pragmatic decisions. We will decide whether to reactivate the project when we have regulatory clarity."

28 people at Sky will be affected by today's decision, and a spokesperson told DS that they will try and "redeploy as many of them as possible". A consultation is currently taking place.