BBC and Sky win battle for digital licence

LONDON - The Independent Television Commission has awarded the BBC the UK digital terrestrial television licence in a bitter blow to the ITV companies which, having brought about the collapse of ITV Digital, hoped they would get a second chance.

The ITC announced this morning that it has made a conditional decision to award Multiplex Service Licence B to the BBC and Multiplex Service Licences C and D to Crown Castle.

Applications were invited in May for the licences, which will run for 12 years. By the closing date of June 13 2002, six applications had been received, including one from ITV companies, Carlton and Granada, in conjunction with Channel 4.

It was a close-run race, with few predicting an outcome. However, in the closing week before the announcement was made, several had begun to tip the BBC's bid over that of ITV.

The other bidders, which included Apax Partners and SDN, were largely seen as rank outsiders largely because they failed to demonstrate their programming line-up. ITV's proposal, a joint venture with Channel 4, was made under the name of the Digital Terrestrial Alliance, and offered viewers a free-to-air service with the option of subscribing to a pay-TV option, called Freeview Plus. BBC's offering with BSkyB and transmission provider Crown Castle proposes a free-to-air only service.

There was a concern that the BBC's joint bid with the Rupert Murdoch-owned Sky may have foundered on competition concerns. Commercial broadcasters had been arguing that BSkyB will gain a pay-TV monopoly if it won.

The ITV bid had against it something much larger -- the failure of ITV Digital and the loss of at least £1.2bn, not to mention bringing the Football League in England to its knees by refusing to honour a three-year broadcasting deal.

ITV companies are now facing a possible £500m legal case from the league for compensation. The case could hang over ITV for months on end and would cloud any new digital TV service.

BBC director general Greg Dyke has told reporters this week that the pay platform was not economically viable. "I don't see why the public would want to pay £8 to £10 a month for eight extra pay-TV channels," he said.

In making its licence award, the ITC said it considered a number of criteria including the timetable for the launch of the service; proposals for promoting receiver take-up; ability to establish the proposed service throughout the licence and the capacity of the programme services proposed to appeal to a variety of tastes and interests.

In a statement, the ITC said its decision was based on the following factors:

"The opportunity provided by the consortium for a fresh start for DTT by offering a distinctive new proposition to consumers.

"The consortium's top level resolve to launching and sustaining a service for the duration of the licence."

The ITC said that both the ITV and the BBC bids put forward largely similar free-to-air offerings, although the BBC proposed slightly more channels in their free-to-air line-up. The commission said it also considered the case made in the Freeview Plus application for additionally offering consumers a "pay-lite" channel selection, but said content was only one of the specified matters it was required to take into account.

Sir Robin Biggam, chairman of the ITC, said: "The commission believes that the BBC/Crown Castle application is the most likely to ensure the viability of digital terrestrial television. It will target those viewers who have not been so far attracted by digital TV and will help facilitate the move towards digital switchover."

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