Murdoch and BBC in satellite TV battle: Plan for Arabic service in Middle East leads to court case

THE opening shots have been fired in a satellite television battle between Rupert Murdoch's Star Television and BBC World Service Television, who are partners in a Hong Kong-based service.

At stake is the future transmission of a BBC-originated service, funded by advertisements and watched by 80 million people, especially in India and China. It is the prototype for a global expansion planned by BBC World Service Television (WSTV), a commercial offshoot of the World Service, but it also threatens Mr Murdoch's plans for a global news channel.

BBC WSTV, which has supplied a 24-hour English language news and documentary service to Hong Kong-based Star for the past two years, has issued a writ asking the Chancery Division of the High Court to declare that its contract with Star allows it to proceed with an entirely separate proposed Arabic language satellite channel for North Africa and the Middle East. This would be funded by undisclosed backers.

In a related action it has also applied for an injunction preventing Star TV from terminating its contract with the BBC, as it threatened. The BBC originally negotiated a 10- year contract to supply the programmes to Star, which meant Star met the BBC's costs of the news service. But the agreement is believed to include a review after three years.

Mr Murdoch, who has installed his most trusted managers from BSkyB at Star, recently took control of the channel and wants to recast Sky News as a global news channel, akin to CNN. Sky News has also been trying to recruit, with limited success, some of ITN's top talent.

Star TV claims that the BBC is breaching its contract by starting an Arabic service, drawing on the strengths of the World Service radio newsroom. This might also trespass on to the footprint of the Star satellite in the Middle East.

Bob Phillis, BBC deputy director general, said it was an essential part of WSTV strategy to develop vernacular services and plans are well advanced. It was taking the matter to court to gain clarification of its legal rights and to safeguard the delivery of its Star service.

The BBC's name has helped ensure the success and growing popularity of the Star service. Christopher Irwin, chief executive of WSTV, said the two services would not share programming. He said he was puzzled by Mr Murdoch's position because the BBC's programmes were 'doing good business for Star. They are attracting more advertising revenue than they would otherwise have done. The service has undoubtedly been driven by us, we have opened up markets for Star'.

However the developments are also perceived as a warning to the BBC against getting too enmeshed with Mr Murdoch: it already shares Premiership football rights with it.

European viewers are paying more than pounds 2bn a year for pay television channels, with Rupert Murdoch's BSkyB second only to Canal Plus of France, according to research by Satellite TV Finance, a specialist newsletter. The biggest earner is Canal Plus with an annual revenue of pounds 858m. BSkyB, with two film channels and Sky Sports, is in second place with revenue of pounds 489.69m. The survey shows that Sky Sports is the fastest growing.

It also noted that Sky News did not have the documentary programmes that the BBC's domestic British service can provide to supplement news. 'You can't keep an audience just with rolling news,' Mr Irwin said. The Arabic service, supplied on a 10-year contract, is likely to be worth about pounds 20m to the BBC and it would create 250 jobs. The matter is expected to go to court on Thursday.