BSkyB could be the next major player to invest in UK video-on-demand (VoD) pioneer Yes Television.
According to a report in the Sunday Telegraph the News Corp subsidiary BSkyB is preparing to take a stake in Yes, which is currently in the middle of an £800m flotation on the London Stock Exchange. Neither BSkyB nor Yes Television have confirmed the report - and mention of BSkyB as an investor at the flotation stage is absent from Yes' prospectus. However, that would not stop BSkyB buying shares on the open market.
If it did take a stake, BSkyB would follow Buena Vista and Warner Bros which are becoming shareholders as part of the flotation process and after the sale of new shares will own 6.8% and 7.5% of the group.
According to its proponents, VoD technology poses a major threat to premium and specialist pay-TV channels, such as BSkyB's Sky Movies, which do not have the capacity to offer unlimited and instantaneous movie choice. By buying itself a slice of the competition BSkyB could hedge its bets by exercising a degree of control and share in the profits made at its expense.
Yes' prospectus suggests that BSkyB is being carefully watched: "The directors believe that BSkyB's recently announced alliances with Kingston Communications and TiVo are both indications of BSkyB's interest in the broadband interactive market."
BSkyB is already very familiar with Yes. It has a joint venture with Yes's parent Elmsdale Communications to supply programming in East Yorkshire.