ITC move on levies could cut bills

The Independent Television Commission yesterday announced proposals to change the way in which ITV companies' payments to the Treasury are calculated. The move could reduce annual bills for some broadcasters by millions of pounds.

The industry watchdog's long-awaited document on licence renewal suggested that levies in future should be tied primarily to a company's advertising and sponsorship revenues. Each ITV company's payment to the Treasury varies wildly, and is heavily influenced by the cash bid paid when the licences were awarded in 1993.

Some broadcasters are paying millions of pounds more than others because they had to outbid rival operators for a franchise in 1993. And some pay a higher percentage of their sponsorship and advertising revenue, or Percentage of Qualifying Revenue (PQR), than others.

STV and Central both pay only pounds 2,000 annually because they did not have to outbid other broadcasters. By contrast, HTV's pounds 22m contribution each year reflects a tough contest against three other contenders.

The ITC said yesterday that "as a general rule", 75 per cent of an ITV franchise's total payment would be derived from PQR. A spokesman added: "We're shifting the balance away from the cash bid element to allow for the greater uncertainties of the future."

Last year around 60 per cent of the pounds 412m the Treasury received from the entire ITV network stemmed from the cash bid, and almost 40 per cent from the PQR.

ITV companies also learned yesterday they had three opportunities to apply for licence renewal before the 10-year licences awarded in 1993 run out. Companies can apply at the earliest by the end of next year, for licences taking effect from 1999. Licensees can also apply for renewal at the end of 1999, or at the latest at the end of 2000.