British Satellite TV Networks Plan to Merge : Entertainment: The two rival systems had been losing millions of dollars each week.

After losing a combined $2.4 billion, Britain’s rival satellite television networks announced Friday that they will merge, ending a bitter and expensive battle for market domination.

Rupert Murdoch’s Sky Television will join with British Satellite Broadcasting, which is owned primarily by a consortium of European media companies. The new joint venture will be controlled 50-50 by Murdoch’s News International and BSB’s principal shareholders, Granada Television Ltd., Pearson PLC, Reed International and the French group Chargeurs, according to a company announcement.

It’s the “end of a satellite war,” said the anchor on Sky Television’s all-news channel, which broke the story on its 9 p.m. newscast.

There was no immediate information on when the merger would take place, but a News Corp. source said merger discussions have been under way for three weeks. The new company will be called British Sky Television.

The two companies broadcast via satellite direct to homeowners, who must purchase small dish antennas to receive the programs.

Both satellite networks have been losing millions of dollars each week, with neither company able to sign up enough subscribers to be profitable. Sky is in about 1.6 million homes, while BSB has signed up less than 100,000. At the same time, the rivalry has forced Sky and BSB into bidding wars for programming, dramatically escalating costs.

Buying films for the pay movie channel that each network operates proved especially costly, with both companies competing for rights to the same films. While the rivalry was good for Hollywood’s studios, the merger is expected to result in lower fees paid for films. “We’ve paid ridiculous prices. That inevitably will change,” said one Murdoch executive, who declined to be identified.

But the new company will still be hungry for movies. Although Sky’s four channels and BSB’s five will be pared down to a combined total of five channels, two of those will be their existing pay-movie channels. There was no information Friday on the content of the other three channels.

The new network will be transmitted from both Sky’s satellite system and the one used by BSB, but an individual close to Murdoch said his company would manage the joint venture.

“The combined investment to date incurred by Sky and BSB exceeds 1.25 billion pounds,” or about $2.4 billion, according to the company announcement. “This investment continues, but both parties are confident that together they will provide more effective competition to existing broadcasters on a profitable basis.”

BSB is believed to have invested about $1.8 billion to date, while News Corp. executives say they have put about $600 million into their enterprise.

With news of the merger coming so late in the day, there was little public reaction. But Michael Grade, head of the British broadcast network Channel Four, appeared on a news program and denounced the merger. He declared it “scandalous” that Rupert Murdoch, who also owns five national newspapers, should have such extensive control of British media. The merger apparently will have to be approved by Britain’s Monopolies and Mergers Commission.

The merger should help Murdoch’s much-publicized debt problems, as Sky has been a major drain on his company.

Joining Sky with BSB should save Murdoch’s News Corp. about $200 million in its current year, said a source familiar with the deal.

News Corp. continued to believe that Sky would turn a profit in two years, the source said. The company believed that it might have to spend as much as another $1 billion over the next two years to win its battle with BSB. “It probably would have won in the end. But it would have been two hard-fought years. We always believed if there were a single service covering all the U.K. . . . my God, it would be a bonanza. Well, 50% of this is a bonanza.”

While the merger should ease Murdoch’s building cash flow crunch, a News Corp. official said further restructuring remained likely, including the possible sale of one or more of Murdoch’s U.S. magazines. But the official denied widespread rumors that all of Murdoch’s American magazines, including New York and Mirabella, were up for sale.

BSB, which was launched last April, has been beset by problems, including manufacturing setbacks that severely hindered it from getting its dish receivers into stores for months.

Sky, which debuted in February, 1989, has had more success in reaching viewers, but has still been losing about $4 million each week.

Staff writer Michael Cieply contributed to this story.