Murdoch faces satellite dish tax

THE Government is threatening to slap a huge 'satellite dish tax' on Rupert Murdoch's BSkyB. The radical plan would charge unlicensed TV companies such as Sky for access to the airwaves used to beam programmes into millions of homes.

Its outline is buried in the draft Communications Bill published last week. The size of the potential levy on Sky, 40% owned by Murdoch's News Corporation, is unclear. But analysts speculate that Tony Blair could use the threat of a 'dish tax' to squeeze concessions from Murdoch, owner of The Sun, News of the World, The Times and The Sunday Times. Any levy could be made on users of the Sky service, or imposed on the company itself.

The draft Bill was initially seen as favourable to Murdoch because it would allow him to expand his TV empire by bidding for Channel 5, though not ITV companies Carlton or Granada. But the Bill clearly states that Sky, rather than terrestrial broadcasters, should bear the brunt of any new charges for so-called spectrum access.

At the moment, only users of terrestrial radio frequencies have to pay for access to the airwaves. Satellite broadcasters - of which Murdoch's company is the only one serving the UK market - pays nothing.

The Bill says: 'There is currently no mechanism to charge for the use of the spectrum (by satellite operators) . . . Moreover, it places terrestrial operators, who pay licence fees, at a competitive disadvantage.'

Access fees 'would be subject to the existing spectrum pricing regime,' the report continues. ITV companies already pay the Government £360m a year for the right to use the airwaves.

To raise a similar amount from Sky would cost Murdoch - or his customers - the equivalent of £60 for every satellite TV household.

Media experts said the Government's end-game was far from clear. 'The bill is clearly talking about a tax by any other name, but the Government is not saying how much or who should set the level,' one analyst said.

The idea of charging satellite firms such as Sky was first mooted in a highly technical report for the Government by Professor Martin Cave of Warwick Business School, published in March.

His report was mainly concerned with allowing mobile operators to trade their spectrum so that it could be used more efficiently.

But Cave also considered other potential uses for the frequencies by which Sky sends TV signals to 5.9m subscribers in the UK. The company takes an average of £341 a year from each of them.

Cave came up with no conclusions about what regime should be imposed on Sky. He said: 'My remit was to cover interference with other users, which is not an issue for Sky, and opportunity cost - that is, could the spectrum it uses be put to another, possibly better, use?'

But Cave did recommend that the director-general of Ofcom, the industry watchdog yet to be created, should set the level of any new spectrum fee.

When Culture Secretary Tessa Jowell announced the Communications Bill last week, she said that the Government broadly supported Cave's findings. But a Department of Trade and Industry source said the formal response to his report was still two months or more away.

The DTI declined to say how many times Ministers had met BSkyB to discuss the implications of the bill. Sky did respond to Cave's report, but its reply has been kept secret at the broadcaster's request. Astonishingly, Sky replied before Cave had formally submitted his report, according to a source close to the Government.

Sky publicly dismissed the idea of a dish tax and has already started work on its attack. A spokesman said: 'It is not as if the spectrum we are using is a scarce resource and we don't cause interference.

'There is no reason to charge us. And if the Government wanted to charge the subscribers, it would require an entire new bureaucracy.'