Sky hit by escalating EDS legal costs

BSkyB spent £12m on its lawsuit against IT services firm EDS in the second half of last year – and expects the bill to rise to £18m by end-June, it said today.

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BSkyB spent £12m on its lawsuit against IT services firm EDS in the second half of last year – and expects the bill to rise to £18m by end-June, it said today.

The TV and broadband giant's latest spending figures on the case against EDS – over a delayed and difficult CRM system implementation – are slightly up from a projection it made in November that it would spend £16m in the fiscal year to 30 June.

In preparing for the case, which is currently in court, Sky spent a further £6m in 2006/7, meaning the total legal bill is currently pegged at £24m.

Sky is alleging in court that EDS misrepresented its abilities and resources when bidding in 1999 for the £48m deal to build a CRM system. It is claiming £709m for lost benefits after late delivery.

EDS has rejected the claim, arguing it could not promise exact resources as Sky “did not know what it wanted” from the project.

The legal spat first began in 2003 when Sky served a draft pleading to EDS, seeking compensation for the extra costs it said it had incurred. But the case did not begin in court until late last year, after extensive legal wrangling and pre-trial disclosure of documents between the two sides.

In 2004 EDS served a counter claim on Sky, denying the charges and seeking £4.7m in damages. It is understood this is to be scrutunised in the current court hearing, which is expected to run for several more weeks yet.

Sky released today's figures as it reported a half-year loss of £112m. This was mainly the result of having to take a £343m writedown on a stake it holds in ITV that the government has ordered it to cut over competition concerns.

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