Channel 4's record £125m bid for 'Friends' and 'ER' sees off Sky

Channel 4 shocked its competitors yesterday by paying a record $200m (£125m) for broadcasting rights to Friends, ER and a number of other American programmes. The amount proved too much for Rupert Murdoch's Sky, the counter-bidder.

Channel 4 shocked its competitors yesterday by paying a record $200m (£125m) for broadcasting rights to Friends, ER and a number of other American programmes. The amount proved too much for Rupert Murdoch's Sky, the counter-bidder.

The three-year contract with Warner Brothers gives Channel 4 exclusive UK rights to broadcast Friends on terrestrial television or pay-tv. Sky currently has a contract to show the hit comedy series on satellite before it is broadcast on Channel 4.

Elisabeth Murdoch, the managing director of Sky networks, downplayed the deal, saying: "We simply felt that $200m was too high for an acquired series that, by 2003, is set to enter its ninth season." Insiders said, however, that Sky was livid at losing the contract.

Channel 4 is now expected to use the deal to bargain with BSkyB when it launches its planned new pay-tv entertainment channel, E4, next year.

If Channel 4's board gives E4 the go-ahead, its executives will have to negotiate with BSkyB to win it a good deal on the digital satellite platform. Channel 4 is expected to offer Sky editions of Friends in return for good terms for E4.

Friends and the hospital drama ER will give E4 "a backbone" on which to build, said a Channel 4 insider. The new channel will also carry a lot of home-grown comedy, and could be "a sort of Channel 4-2," in the same way that BBC 2 is sometimes used to launch programmes before they transfer to BBC 1.

But Channel 4 is also perceived to be playing a high-risk game. The Friends and ER deal has, in one go, swallowed up nearly four months of its programme budget of around £400m a year. The amount also dwarfs the £55m it spent this summer on buying rights to test match cricket.

Also, there is a risk that it has bought at the top of the market, just as both series are passing their prime. Friends has not recovered the edge that it had when the "Ross and Rachel" romance storyline was at its height.

ER, meanwhile, needs to keep its momentum despite the loss of George Clooney and Julianna Margulies, who plays nurse Carol Hathaway. Ms Margulies has just turned down $17m and will leave the series.

The problem for Channel 4 was that it could not afford to lose Friends, which is consistently its most popular show. When Warner Brothers decided to sell the pay-tv and terrestrial rights as one package, rather than two, it forced Channel 4 into its most costly bidding war yet with Sky.

Under Sky's 1996 contract with Warner Brothers it will show series six of Friends in the New Year, and still has three years worth of rights on some repeats. From series seven onwards, Channel 4 will hold all the rights.