Telefonica, Kirch Link Up In Digital Tv Venture

Telefonica said other shareholders might join the planned venture, the latest move in a Europe-wide race to launch digital television systems capable ultimately of offering several hundred television channels.

British Sky Broadcasting, the UK satellite venture controlled by Rupert Murdoch's News Corporation already has a digital TV joint venture with Kirch in Germany and is seriously interested in joining in the Spainish venture.

The agreement between Telefonica and Kirch was reached on Tuesday in a meeting in Madrid between Mr Leo Kirch, head of the German group, and Juan Villalonga, the new Telefonica chairman.

The Spanish side has set two main conditions: that it should hold the controlling stake in the joint venture and that the network should be available to any programme provider.

Villalonga first outlined Telefonica's ambition to establish a platform for digital television channels last month. The company said the move was part of its strategy of being involved in all areas of telecommunications.

The main onus of investment would be not so much on satellite communications, in which Telefonica was well placed, but on new multi-use decoders.

Telefonica said that Canal Plus, the Spanish affiliate of the French group already providing encrypted television, would not be excluded from the new system.