NEWS ANALYSIS - Sky's breakthrough.

BSkyB is finally poised to muscle into terrestrial TV this year after landing a contract jointly to produce Channel 4's replacement for the Big Breakfast. Success with the show would be the satellite giant's first major terrestrial breakthrough since its involvement with TV-am, which lost its ITV franchise almost 10 years ago.Last year Sky had mixed success expanding into terrestrial. The well-publicised attempt by Sky News to scoop the ITV news supply contract from ITN failed, although Sky News has since won a minor contract to provide Channel 5 with an early-morning news feed.However, the C4 contract provides a window for Sky and its sports and news brands. The contract was snared through a joint proposal, devised by Sky and Princess Productions, which saw off competition from around 50 contenders, including Talkback Productions and RDF Media.The contract was fiercely fought over, with eight leading producers shortlisted but the Sky-produced pilot convinced C4 editor, breakfast strand Sharon Powers.She says: 'We were thrilled with the pilot and felt that it was a genuinely distinctive offer at breakfast-time.' She adds that the show will include 'topical entertainment stories, news, weather and sport in a contemporary way'.The as yet unnamed strand is to be produced at Sky's base in Osterley, running live from 07.00 to 09.00 on weekdays and starting shortly after the current Planet 24 show goes off-air on 29 March.Production for the pilot was overseen by Sky director of broadcasting and production Mark Sharman, Sky head of content and creative affairs James Baker together with Princess Productions joint managing director Sebastian Scott - who was one of the original editors on the Big Breakfast.Baker and Scott are expected to executive produce the show.With a total workforce of around 2,500 people, including graphics, editing and camera staff, along with seven studios and 36 post-production suites, Sharman says that Sky is well positioned for production expansion.He adds that despite Sky being one of the biggest news and sports producers, he is still asked by 'people in the establishment' when the broadcaster is going to make its own productions. And while he says he is not actively seeking further terrestrial commissions, it seems likely the C4 contract will be the first of many.Sky's clout in news and sports is understood to have played a key role in helping to land the contract, together with the creative nous of Scott - whose credits with Princess Productions include shows such as E-Millionaires and Model Behaviour.Sharman says the show will have a 'fundamentally different audience' to GMTV's older age range, targeting 18 to 34-year-olds and, while not being a serious news show, Sharman says it will not shy away from covering serious news.Claiming the programme will be substantially different from the Big Breakfast with much more content that is 'richer', he says: 'There will be a lot more stories in it - greater depth and a broader range.'He says: '(Sky branding) will appear through the programme more than just as an end credit although it will not be overt.'Sky and Princess Productions face a real challenge to scoop a share of the estimated 15 million breakfast-time viewers. Before the Christmas break audience figures revealed that GMTV averaged around a 28 per cent share, with the BBC holding 22 per cent and C4 limping in with around 6 per cent, although it ran an hour less than its rivals.BBC editor, Breakfast Richard Porter thinks Sky's involvement poses a real threat to both the BBC's and ITV's breakfast offerings. He says: 'It would be naive to dismiss the threat of a new programme. We will be on our toes when the programme goes on air.'Porter says the news element to the show is crucial. He says: 'You cannot assume it will be like Sky News. If they are aiming at the same audience as the Big Breakfast it would be the more topical side of news.'Princess Productions and Sky will also come up against the current market leader, ITV's GMTV. GMTV director of programmes Peter McHugh says Sky's entry into first-run terrestrial production means it could exploit its huge sports production team, while loss-making news service Sky News would be able to spread its annual #32m cost.McHugh says the commission poses questions about Sky's future strategy.He says: 'Does Sky plan to concentrate on being a platform using bought-in material or does it have plans to go down the programme production route?'Others don't see much benefit from the contract in terms of extra income for Sky but see the fresh exposure for the Sky brand as highly significant.NTL director of TV Rod Henwood thinks that the yearly profits expected from the deal, thought to be between #3m and #4m, are marginal in the grand scheme of things.'But it provides quite a lot of credibility for any future aspirations - it has got through all the hurdles that C4 has put in its way and it has got a deal on an arm's length basis,' he says.But the broadcaster may face obstacles blocking any further spread into terrestrial. The Office of Fair Trading (OFT) has already announced that it plans to rule that Sky has acted anti-competitively and abused its dominant market position in several areas, including the supply of sport and film channels.If the OFT presses ahead with the ruling, Sky could face a fine of up to 10 per cent of its #2.3bn annual turnover and restrictions on what it charges rivals such as Telewest and ITV Digital for content.But while current media ownership rules block Sky from owning a terrestrial franchise, winning long-running programming commissions, particularly involving news and sport, may well be the next best option.