BSkyB subsidiary denied franchise: Decision reversed on bid for TV text service

A TRAFFIC delay of less than 10 minutes means that a subsidiary of British Sky Broadcasting, half- owned by Rupert Murdoch, has lost the franchise to broadcast a subscription text service on Channel 4.

The Independent Television Commission ruled that the bid by Skytext - by far the higher of the two submitted - could not be entertained because it had arrived shortly after the noon deadline on 3 August.

The franchise, for services using spare capacity on Channel 4's waveband, will go instead to SimpleActive Ltd, a company jointly owned by Guardian Media Group and Data Broadcasting International, which runs a similar service to closed user groups on Channel 3's frequencies.

The ITC can now reject SimpleActive's bid only in the unlikely event that it finds it financially unsustainable.

The ITC's decision is an expensive one for the Treasury, to which winning bids are paid. Where Skytext offered pounds 355,000 a year for the 10-year franchise, SimpleActive bid only pounds 78,000.

An ITC official initially announced, just after the bids had been received, that Skytext's would be entertained because the delay had been caused by heavy traffic on the day of a rail strike. Justin Cadbury, executive director of SimpleActive - who had delivered his bid in person about half an hour before the deadline - complained about the ruling. He said that traffic had not been all that heavy.

At a meeting of the full commission on Thursday the decision was reversed. Michael Meceica, managing director of Skytext, was angry yesterday. 'It's a matter of public record that our application was accepted,' he said. 'The only loser is the public purse. We are considering our position.' He added that the delay in the arrival of the bid at ITC headquarters was 'not my fault'.

Mr Cadbury said Skytext's excuse for the delay was 'fairly fatuous' and added: 'It isn't as if there was an earthquake or anything like that . . . In this country we believe in playing by the rules.'

He said that the proposed Channel 4 service would complement that on Channel 3 by providing fast on-line information to individuals and businesses, designed mainly to be fed into computers. The company already delivers starting prices in this manner from Ladbrokes to its betting shops.

Mr Cadbury envisages numerous other possible uses, such as for multiple shops that need to communicate quickly with branches in the event of product recalls. These subscription services are additional to the free Teletext service on channels 3 and 4.