Actually there's a view in the City that pounds 75m rather understates the value of its one-third equity stake in the successful bidder. Some analysts are already valuing the company, now that it has won the licences, at more than pounds 1bn. Not bad for a franchise which carries no Exchequer levy whatsoever. None the less, Granada and Carlton would plainly have been better off had Sky never been included. Before investing any more in digital terrestrial than the cost of preparing the bid, they now start pounds 75m down.
Nor does everyone share the ITC's view that it has solved the competition problem by excluding Sky from equity participation. Indeed the ITC seems to be displaying not a little naivety in believing the boil has now been lanced. The point is that Sky continues to be a leading participant in the new platform even though it has been excluded from ownership. A great chunk of the programming will be supplied by BSkyB under the same sort of terms it already supplies the cable industry. In other words it will be able to extend Sky movies and sport on to the new digital platform. Sky will probably also supply the basic subscription technology and management systems.
According to Don Cruickshank, director general of Oftel, this in itself raises substantial competition concerns in the pay TV network and conditional access markets. Even if the rival bidder, Digital Television Network, doesn't mount a legal challenge to the ITC's decision, Mr Cruickshank seems to be laying down a clear marker. What in effect he's saying is that the ITC is not qualified or adequately positioned to deal with these concerns. It's hard to disagree. There's more than a hint in this latest decision of the old IBA. Stitched-together deals in smoke-filled rooms usually result in unsatisfactory compromise and that's precisely what seems to have happened here.
The need for a full-time economic regulator of this industry - an Ofcom - grows steadily more urgent. That job should go not to the ITC, but to Mr Cruickshank at Oftel. Leave regulation of content to the ITC by all means, but the business of ensuring and safeguarding adequate competition seems to require a rather more sophisticated and modern approach.
Wrong move by pensions firms
Memo to the financial services industry: if you are planning to write to Helen Liddell, the Economic Secretary to the Treasury, be sure to eat some humble pie. This, at least, must be the conclusion from yesterday's "naming and shaming" of Legal & General and the Sedgwick Group, two companies heavily involved in the mis-selling of personal pensions in the late 1980s and early 1990s.
Last month, Mrs Liddell wrote to 24 life insurers and large financial advice firms, of which Sedgwick is one, asking them to tell her how they proposed to clear the backlog of pension cases still waiting to be processed. Almost without exception, the replies not only provided details but added covering letters in which they assured the new Minister of their determination to resolve this long-running problem as swiftly as possible.
In several instances, they also pointed out to Mrs Liddell that there were a number of problems in reinstating pensions mis-selling victims back into their former occupational schemes. The most significant hold- up appears to be the slowness with which some company schemes are delivering information about their former members back to the insurance industry.
Mrs Liddell seems willing to listen to mitigation of this sort and has promised to take action, particularly with public sector pension schemes, some of which are dragging their feet and have re-admitted barely any former members. But Legal & General and Sedgwick went further than this. L&G chose to tell the Minister that its board did not believe criticisms of the industry's inactivity in her letter were justified. Sedgwick suggested that Mrs Liddell had not been properly briefed before her meeting with the industry last month and in relation to her subsequent letter.
Big mistake. Their record may not be the worst among the 24 firms summoned to the Treasury last month. But by failing to show contrition, they've now had themselves "named and shamed". Mrs Liddell is absolutely right to do this, unfair though it might be. As she made clear yesterday, it is an outrage for 18,000 people to have died without being compensated by the industry. Everybody is tired of hearing excuses.
The scandal of 600,000 people still waiting for their cases to be dealt with demands more than the observation that Ministers have not been properly briefed, especially from companies like Sedgwick, which still has to complete its mailing to all potentially affected clients. The industry would do well to heed the lesson of yesterday's first "name and shame" exercise, or more companies will face Mrs Liddell's wrath.
High risks as the pound soars
The pound's remarkable climb is due to two things: euro troubles and dollar wobbles. It is a simple choice for investors. On the one hand, the British economy is belting away and interest rates are bound to rise during the summer. On the other hand - well, there is no other hand actually. Single currency turmoil makes the main European currencies unappealing, and the euro itself seems increasingly likely to be a soft currency. Across the Atlantic, the US economy looks just dandy, but with the next interest rate rise receding and the risk of Japanese investors pulling out increasing, the risks are greater.
Sterling therefore looks to currency markets like an ideal one-way bet. Some analysts are talking about it reaching DM3 before long.
The catch is that the higher the pound climbs, the more overvalued it becomes, and the more damage it does to the balance of payments. There is a consequently greater risk of correction. Goldman Sachs yesterday sent clients a circular saying the currency was already 15 per cent overvalued and advised them to sell rather than buy.
Undoubtedly Goldman is right about this but as ever timing is all in markets. The correction could come as early as the next rise in base rates, which might prompt profit taking. If Wall Street dives because of a Japanese sell-off, sterling would probably drop with the dollar. Or it could be the next re-evaluation of prospects for US interest rates. Who knows, Continental politicians might even get the EMU roadshow back on track.
Whatever the case, most of us will be keeping our fingers crossed that sterling stays at these giddy heights long enough to sustain our Continental holidays.Reuse content