BSkyB proceeds with lawsuit against EDS

British Sky Broadcasting (Sky) yesterday started the legal proceedings against EDS that it had warned of earlier this month, accusing the IT services provider of 'deceit, negligent misrepresentation and breach of contract'.

In its annual report, published two weeks ago, Sky noted that it would seek a 'material amount' to compensate for problems with its CRM systems.

In reply, EDS now says that it plans to launch a counter-claim against Sky for unpaid bills, thought to total several million pounds.

A spokesman for the IT services company says the claim by Sky is 'ludicrous'.

'It is absolutely outrageous. It has no resemblance to the original contract we signed in November 2000,' he said.

The EDS contract was a substantial part of Sky's £170m investment in CRM since 2000, but the deal was terminated in December 2002, with the broadcaster deciding to do the work itself.

Earlier this month, chief executive James Murdoch noted that Sky plans to invest a further £50m investment in CRM over the next four years.