Murdoch chief threatens to sue BBC
By Kate Bulkley
October 13 2003
Rupert Murdoch's News Corporation is considering suing the BBC to stop it showing programmes like The Simpsons, 24 and Buffy the Vampire Slayer after it decided to change its distribution of BBC1, 2, 3 and 4 on satellite TV to make them available in continental Europe for free.
Rupert Murdoch's right hand man has condemned the BBC's decision to un-encrypt its channels as "wrong" and said he is considering all potential options.
"We don't believe the BBC has the right to provide an unencrypted signal with our programming," said Peter Chernin, who is chief operating officer of News Corp.
"We are not happy and we are also sort of shocked. The BBC is not some renegade company. It's a public trust in a society that does have copyright laws and one top of that it is one of the great content producers. We think that what they are doing is wrong," he added.
News Corp is furious with the BBC because its channels are now available to potentially millions of ex-pats in Spain, France, and elsewhere in Europe.
Mr Murdoch was forced to encrypt his Sky services more than 13 years ago because of concern from American movie studios that services like Sky Movies could be seen abroad for free. At the time there was also concern from local broadcasters who were setting up pay-TV services with schedules offering the same content.
"We could stop selling to the BBC, or ask for an injunction - or we could sue them," said Mr Chernin, who was speaking at the Mipcom TV market where he was honoured as Personality of the Year.
As owner of the 20th Century Fox TV and movie studios, News Corp could threaten the future of some of the biggest shows on BBC2. A third series of 24 is currently being produced and at the moment the BBC has not secured the rights to screen it.If it succeeded in getting an injunction out against the BBC, News Corp could also black out shows it currently has the right to screen including The Simpsons, Buffy the Vampire Slayer and Malcolm in the Middle, a sitcom about a dysfunctional family - all made by Fox TV.
"The BBC is one of the greatest content producers in the world and should be as concerned about the protection of content and the legal transmission of content as anyone in the world - and we think they are taking a short-sighted view on this," he added.
The BBC is currently in negotiation with 20th Century Fox Television, but by the end of the Mipcom weekend it had not secured a new deal.
Other studios have also expressed concern over the BBC's decision to go unencrypted, but Disney's Buena Vista International Television distribution arm signed a new film deal for a package that includes Pirates of the Caribbean, Calendar Girls and Chicago.
David Hulbert, president of Disney Television International, said although digital rights protection is a "major issue" for Disney, he believes the studio has put "procedures in place" that will protect Disney products.
"We believe that both the commercial terms and the appropriate legal and copyright protections are in place should there be an over spill problem," he said.
The BBC began transmitting all of its channels unencrypted and in digital from a UK satellite a few months ago as a way to cut £85m in costs it was paying to BSkyB to distribute its channels using the Murdoch encryption technology.
Sony, which owns the Columbia Tristar studio, has insisted on damages if there is any spillover onto the continent in its new TV deal with the BBC to screen new Stephen King series Kingdom Hospital.
Under the deal with Sony, the BBC must take steps to stop any "unauthorised re-transmission of its signals" and also must pay for any damages Sony might suffer if the BBC's signals makes it impossible for Sony to sell its programmes in Europe.
"We have taken a first step with Kingdom Hospital. It's one series and we would like to see how things progress," says John McMahon, managing director of Sony Pictures Television International Europe.
"We want to see how the measures we have included in this deal are enacted and then we can determine how we act towards our other programming."
In a somewhat ironic move, it was announced at Mipcom on Sunday that BBC director general Greg Dyke will give the keynote address at the MIP TV programming market taking place next March 2004 in Cannes. The subject? The digital future of broadcasting and audiovisual content.
As a response to soft market conditions organisers Reed Midem announced MIP TV and the Milia interactive TV market will be co-located next year from March 29 to April 2, 2004.
In a separate development, Mr Chernin also said he would "absolutely like to see" James Murdoch become chief executive of BSkyB because he is "a most experienced and strategic young media executive", particularly in regards to his success running Star TV in Hong Kong, another News Corp operated pay-TV company.
"We are happy to go through the process laid out by the BSkyB board with a nomination committee and a search firm and having a formal search," said Mr Chernin
"We believe that James will fare very well under this process."
Mr Chernin also defended News Corp's track record in hiring good executives to run BSkyB since it was launched 13 years ago, mentioning past chief executives Sam Chisholm, Mark Booth and Tony Ball. "The idea that we would look up one day and say let's put an inferior candidate into a multimillion pound company that so far we have done nothing but try to grow is pretty silly," said Chernin.
"It's ironic that we are 13-plus years into BSkyB and we are just about to launch a tiny, little Fox (entertainment) channel for the first time on the platform. This is the first benefit News Corp has ever seen out of (its relationship) with BSkyB," said Mr Chernin. "And it took us two and half years to negotiate a deal to put the Fox Channel on Sky."
Attending a gala dinner on Saturday night honouring Mr Chernin were several senior News Corp executives including Martin Pompadur, chairman of News Corp in Europe, the president of 20th Century Fox International Television, Mark Kaner. Dawn Airey, managing director of Sky Networks was also at the dinner.