ITC accused of inconsistency over Channel 5

Losers in the controversial award of the Channel 5 licence last night accused the Independent Television Commission of inconsistency, and continued to threaten legal action against the television watchdog.

Meanwhile, sources at the licence winner, Channel 5 Broadcasting, led by Pearson and MAI, said they could make a profit as early as the second year of the 10-year licence.

Sparks continued to fly from all directions in the aftermath of last Friday's decision by the ITC to fail two groups - Canadian-backed UKTV and Virgin TV - on the quality of their proposed programming for the new terrestrial channel. The award went to second-highest bidder, Channel 5, which offered pounds 22m a year for the coveted licence.

Robert Devereux, chief executive of Virgin TV, said his consortium was "putting together a lengthy rebuttal of the points made by the ITC" and said it would meet with lawyers today to see about a judicial review.

"We are convinced," he said, "that the ITC has concocted reasons to fail Virgin TV."

Mr Devereux said the ITC's criticism of Virgin's plans for news bulletins was unwarranted. For its news services, Virgin TV had asked both Reuters and Independent Television News to tender, and said both agreed to provide coverage for roughly the same amount of money.

UKTV was also believed to be closeted with legal counsel last night, to determine whether a judicial review was possible.

The group, backed by CanWest, the Canadian broadcaster, Australia's Channel 10 and SelecTV, the independent producer and cable TV broadcaster now up for sale, bid pounds 36m but was failed on its lack of "diversity" in its proposed programming.

UKTV is believed to want to question the ITC about a meeting on 11 October, two weeks before the award was announced, between CanWest's chief executive, Izzy Asper, and officials of the ITC. At that meeting, the consortium was apparently asked to provide guarantees that it could fully finance its programming and start-up costs, leading UKTV to believe it had passed all other hurdles.

"No one else was asked to come in at the same time," a UKTV insider said.

It is the belief of the UKTV consortium that ITC officials had recommended the award be made to the Canadian-backed group, but that the full commission was against the plan.

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