Channel 5 licence set for this month

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The Independent Online

The licence to operate the new Channel 5 may be awarded as early as 19 October, following the regular monthly meeting of the board of the Independent Television Commission.

The 10 commissioners have already reviewed the four bids in detail, and last week asked staff to send final queries to the bidding groups. Channel 5 Broadcasting, led by Pearson and MAI, was asked about its programming budget, while Virgin TV, a consortium of Richard Branson's Virgin Group, Paramount Television, Associated Newspapers and HTV, was asked for assurances about its controversial retuning plan.

The retuning exercise - aimed at enabling viewers to receive the Channel 5 signal - could cost the winning applicant more than pounds 100m. Three of the four bidding groups intend to visit every home in Channel 5 viewing areas, raising questions about security.

Virgin TV, which promises a youth-oriented programme schedule and a rich selection of made-for-TV movies, has opted for a selective retuning approach, and would encourage viewers to ring a free phone number to arrange for a home visit by a retuner. BT has arranged to supply the telephone service. The ITC is believed to have received a letter from BT confirming its full backing for Virgin.

The evaluation process has generated an unprecedented amount of documentation at the ITC, as the commission endeavours to pre-empt any legal challenge to its decision.

All four bidders, including UKTV, the consortium led by CanWest, the Canadian broadcaster, which offered the highest bid at pounds 36m, are believed to have passed basic quality threshholds. Virgin TV and Channel 5 Broadcasting both bid pounds 22,002,000, and could be asked to rebid in the event UKTV is disqualified. Of the two,Channel 5 Broadcasting is believed to have the edge on programming, particularly in its commitment to educational programmes.

But it appears unlikely the ITC will reject the UKTV bid on the basis of its controversial ownership structure. Under current rules, foreign companies are not allowed to control outright a Channel 5 licence holder. UKTV has established a UK-based trust to hold the bulk of the consortium's shares and the ITC is not believed to have the discretion to it "foreign- owned" under current strict guidelines concerning the definition of "control".

The ITC has reserved the right to prolong the evaluation period beyond November, the internal deadline. But it is believed to be aiming to render its decision at the October meeting. A re-bid between Virgin TV and Channel 5 Broadcasting, would require another 10 days.

The fourth bidder, New Century Television, led by Rupert Murdoch's BSkyB, is widely viewed as having proposed the best programming. But its low bid of pounds 2m has apparently taken it out of the running.