Channel 5 close to satellite deal with Astra

Channel Five, the fifth terrestrial TV channel, which was launched last week, is planning a deal with the Astra satellite system which would give it access to an extra 2 million viewers.

Channel Five can currently reach only about 50 per cent of the UK population and large parts of the country, especially south of London, parts of East Anglia, Wales and the north of Scotland, are unable to receive the signal.

Another 15-20 per cent of the population will need adjustments or extensions to aerials to receive pictures of a watchable quality. An extra 2 million viewers would give Channel Five a further 10 per cent of the potential national television viewing audience.

The satellite-based service from Channel Five would be accessible free of charge to all the 4 million UK households which have a satellite dish, about half of which will already be able to access Channel Five. Channel Five would be expected to pay around pounds 4m a year for the service, which has to be set against the extra advertising revenue it could secure by increasing its accessibility.

Astra has agreed to make transponder space available on one of its satellites to the Pearson group, which is a shareholder in Thames, which in turn owns a 7 per cent stake in Societe Europeenne de Satellites, the Luxembourg- based company which owns the Astra satellites.

Pearson has already agreed to take the space at an annual rental of pounds 3.9m. It is also one of the four controlling shareholders in Channel Five and would, in turn, make the space available to Channel Five at a commercial rate.

Channel Five is currently assessing just how many potential extra viewers the satellite would bring in, and how many of them would translate into actual viewers based on its current response. If it decides the extra cost is unjustified Pearson is expected to sell the space on to a German television channel.

Channel Five's chief executive officer, David Elstein, is known to be keen to add satellite and cable capability, however, and on the basis of the early audience figures he is expected to sign the deal with Astra this week.

Channel Five had earlier started talks with Rupert Murdoch's BSkyB satellite channel to provide access for Channel Five, but this is not now proceeding.

The extra cost of enlarging the potential audience will add to the programming costs, which are now running around pounds 110m a year, and the pounds 22m licence fee payable to the Government.

Retuning an estimated 10 million video recorders to prevent interference from the new channel is expected to cost Channel Five up to pounds 100m, compared with the initial estimate of pounds 55m.

But Channel Five claims to have reached 6.2 per cent of the national TV audience on the opening day, and has fluctuated around 4 per cent of the audience since. It hopes to capture 5 per cent of the national audience after the first year, which would put it roughly equal with the Sky satellite audience.

The new channel has been welcomed by advertisers who hope the extra competition will hold down advertising charges, which have risen by almost 50 per cent over the past five years. Channel Five's advertising has brought in pounds 10m for the first month alone and revenues are expected to reach pounds 60- 70m in the first 12 months.