Costs may rule out Channel 5 bidder - Business - News - The Independent

Costs may rule out Channel 5 bidder

UKTV, the leading bidder in the auction to run Channel 5, has proposed a budget so large that the Independent Television Commission may disqualify it for being non-viable. The consortium, led by Canadian broadcaster CanWest, plans to spend between £150m and £200m a year, a source close to the bid told the Independent on Sunday.

The figures include £70m-£80m spread over the first two years to retune four million video recorders and a further £70m-£80m a year on programming, which would rise to as much as £150m by the end of the 10-year licence.

It also covers set-up costs and overheads as well as the £36.3m a year it bid for the licence fee. The source said UKTV expects to break even within five years.

But City analysts and advertising agencies believe it can only expect to earn between £90m and £120m a year in revenue, partly because it will cover only 70 per cent of UK viewers. "Their expenditure figures appear to add up," said Lorna Tilbian, a media analyst at stockbrokers Panmure Gordon. "The wild card is the revenue. They won't know that until they start doing it."

A serious shortfall could lead to a vicious circle in which programming budgets were trim- med, costing the new channel viewers and ultimately reducing its advertising support. David Asper, head of the company, refused to comment on details of its bid, sticking to an earlier state- ment that advertising was hard to predict beyond two years.

"We've been very conservative and cautious," he said. "We wouldn't have submitted our bid unless we were certain the business plan would give a fair return to our investors."

If it did throw out the UKTV bid, the ITC would have to decide how to choose between the consortia led by Richard Branson's Virgin and Pearson, which both bid £22,002,000. Rupert Murdoch's BSkyB, the pre-bid favourite, seems out of the running after offering just £2m.

The ITC would also have to reckon on a lawsuit if it uses one of the get-out clauses in its invitation-to-apply document to dump UKTV. "I would be very concerned if any government acted deliberately against one individual," said Mr Asper.

UKTV has been under fire since Tuesday, when the ITC opened bids from four consortia eager to run Britain's last available terrestrial channel.

Some critics complained that it is largely foreign-owned, while others pointed out that it was a last-minute entry, which was scraped together from the ruins of the NBC-Mirror Group-SelecTV consortium that pulled out eight days before the auction closed.

But the Independent on Sunday source said the CanWest package was essentially in place two weeks before that. The negotiating team was within minutes of deciding which of two companies would fill the final slot in the equity structure when news broke that SelecTV was available.

The independent British producer of shows such as Birds of a Feather was already acquainted with CanWest and the other members of UKTV, Australia's Network Ten and the Scandinavian Broadcasting System.

Talks between CanWest and other interested parties had been going on since November. The Canadian group had even co-sponsored a study with the Mirror and Virgin consortia into the cost of retuning videos.The final equity structure gives CanWest 29.9 per cent, SBS 30 per cent and SelecTV 20 per cent.

Profile, page 16

News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Sport
FootballFull debuts don't come much more stylish than those on show here
News
i100
PROMOTED VIDEO
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
News
The ecological reconstruction of Ikrandraco avatar is shown in this illustration courtesy of Chuang Zhao. Scientists on September 11, 2014 announced the discovery of fossils in China of a type of flying reptile called a pterosaur that lived 120 millions years ago and so closely resembled those creatures from the 2009 film, Avatar that they named it after them.
SCIENCE
Life and Style
tech
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Matisse: The Cut-Outs exhibition attracted 562,000 visitors to the Tate Modern from April to September
art
Life and Style
Models walk the runway at the Tom Ford show during London Fashion Week Spring Summer 2015
fashionLondon Fashion Week 2014
News
Kenny G
news
News
peopleThe black actress has claimed police mistook her for a prostitute when she kissed her white husband
Life and Style
techIndian model comes with cricket scores baked in
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week