PERSPECTIVE: No losers in the ITC cash handout but the luck can’t last

ITV executives were queuing up last week to proclaim that they would be investing the money granted to them by the Independent Television Commission’s licence renewal ruling in more original programming. Well, let’s hope those pledges turn out to be more than hot air - it would be easy for some of the smaller rebates to get swallowed up in ongoing digital investment or, dare one say it, find a snug little home deep inside the pockets of shareholders.

ITV executives were queuing up last week to proclaim that they

would be investing the money granted to them by the Independent

Television Commission’s licence renewal ruling in more original

programming. Well, let’s hope those pledges turn out to be more than hot

air - it would be easy for some of the smaller rebates to get swallowed

up in ongoing digital investment or, dare one say it, find a snug little

home deep inside the pockets of shareholders.



In truth, though, there won’t be much for these shareholders to snaffle.

The pounds 90 million that will wing its way to ITV is not much more

than the money the network currently receives from the soon-to-expire

Channel 4 funding formula. Last year, in fact, Channel 4 stumped up more

or less pounds 90 million. This year, its payments will come closer to

pounds 60 million. And next year, it won’t pay anything. So, looked at

in this light, most of the extra cash isn’t extra at all.



But, of course, this ignores the fact that the new money will be

distributed in entirely iniquitous proportions befitting the crazy

closed-bid system under which the licences were handed out in the first

place. So, within ITV, there will be winners and losers.



The most obvious winner is GMTV, which might actually be able to start

acting like a proper TV company at last. In this case, investment in

programming is the only option.



Both Yorkshire Tyne Tees and HTV will also be celebrating the estimated

pounds 24.5 million and pounds 16.5 million lopped off their respective

annual bills.



But what of the so-called losers? Well, in this extremely odd little

game, they can walk away if they don’t like the result. So Central,

rather than pay pounds 17.5 million more to the Treasury each year, has

unsurprisingly elected to carry on as before. Meanwhile, five of the 16

licensees, including Granada, LWT and STV, didn’t even bother to reapply

for their licences this time around. They know when they’re on to a good

thing.



But the problem for them will come when the next opportunities for

licence renewal come up - in May 1999 and then, finally, in September

2000. Will the ITC be more lenient or will it get tougher? It’s an

interesting gamble, but one which - if it goes to the wire - could cost

these cocksure punters their licences. If they fail to agree terms at

all, other bidders will come into the reckoning in a formal tender

process.



Some licence-holders may feel relaxed about this. After all, they’ve

played the auction game once and won hands down, so what’s to stop them

pulling it off again? Carlton may very well think it can get away with

another pounds 2,000 bid for the Central licence. And if it tries and

wins, good luck to it. In the meantime, however, the uncertainty could

seriously undermine the stability of the ITV network.



Have your say in CampaignLive Forum on channel 4 of CampaignLive at

www.campaignlive.com



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