Google's Eric Schmidt faces a wary audience of British television professionals on Friday following a major acquisition that could turn Google TV into a real competitor for TV advertising dollars.

Google's chairman will be the first person from outside the TV industry to give the Edinburgh television festival's keynote MacTaggart lecture in its 35-year history.

So far Google's relations with the TV establishment have been rocky.

There is still a general wariness within the TV business, broadly understood, about what Google is there to do, says analyst Dan Cryan of UK media research firm IHS Screen Digest.

The thing that really scares any TV company is the potential for Google coming into their space and selling ads to their customers.

Google has long held ambitions in the television arena, hoping to extend its online advertising business, which made $28 billion for the company last year, to the big screens that still command the lion's share of global advertising budgets.

So far, it has had little success, despite its ownership of the world's most popular online video site, YouTube.

Google TV, which allows viewers to get Web content on their television screens via a browser, was launched last October in the United States. 

Schmidt also included a warning to British television regulators, who he said were far more stringent than their U.S. counterparts and threatened to throttle the development of British television companies in an increasingly global market.

Stifling the Internet -- whether by filtering or blocking or just plain turning the 'off' switch -- appeals to policy makers the world over, he said. Instead, policy makers should work with the grain of the Internet rather than against it.

OPPORTUNISTIC

Google has long held ambitions in the television arena, hoping to extend its online advertising business, which made $28 billion for the company last year, to the big screens that still command the lion's share of global advertising budgets.

So far, it has had little success, despite its ownership of the world's most popular online video site, YouTube.

Last week, however, Google agreed a deal to buy Motorola Mobility for $12.5 billion, handing it the world's leading set top box business which delivers content for many of the top cable TV companies in the United States.

The headline attraction of the deal was Motorola's huge portfolio of wireless patents but the set top box business could help Google transform its TV project by giving it insights into pay-TV and connections with customers and their viewers.

Google has not spelled out its plans for the set top box business, and many analysts expect it to divest the unit at the first opportunity, having no experience or previous interest in running a hardware business.

Others believe Google could change tack under CEO Larry Page, Google's co-founder who took back the reins from Schmidt in April and has already started a social network to compete with Facebook while ditching other projects.

Google describes itself as an opportunistic company. So while it may not have wanted to buy Motorola's operations, it may now assess whether retaining these assets can compensate for the risk of owning them, New York-based Nomura analyst Stuart Jeffrey wrote in a note this week.

Schmidt made no mention of the Motorola acquisition or its implications on Friday, but will hold a question and answer session in Edinburgh on Saturday.