ITC seeks 'no collusion' assurance

Virgin TV and Channel 5 Broadcasting, which lodged identical bids with the Independent Television Commission for the licence to operate Channel 5, must confirm in writing that they did not discuss the terms or the amount of their bids with outsiders.

The ITC is also requiring undertakings that no agreement was reached regarding any subsequent bid should it reopen the auction at a later date. The undertakings must be signed by board members and returned to the ITC by early June.

The request followed weeks of speculation surrounding the dead-heat bids of pounds 22,002,000. Virgin and Channel 5 Broadcasting have said they would fully co-operate with the ITC. Channel 5 Broadcasting has launched its own inquiry into the role played by Coopers & Lybrand, which acted as reporting accountants for the consortium. A media group within the management consultancy arm of the firm advised Virgin TV.

Speculation about the identical bids prompted the ITC to seek assurances in advance of announcing whether a second round of bidding would be necessary. A re-bid would only be launched if UKTV, the Canadian-led consortium that made the highest cash bid, pounds 36m, was disqualified on the basis of the viability of its business plan or for failure to meet programming quality threshholds.

Channel 5 Broadcasting is owned by media and information company Pearson, media and financial services holding company MAI, European broadcaster CLT and Warburg Pincus. The Virgin TV consortium includes Richard Branson's Virgin Group, electronics company Philips, Paramount Television, HTV, and Associated/Associated-White Rose.

A fourth contender, New Century Television, bid only pounds 2m, and would not be asked to re-bid in a second round. It included BSkyB, the satellite television channel 40 per cent owned by Rupert Murdoch's News International, television and leisure group Granada, music company PolyGram, European broadcaster Kinnevik and Goldman Sachs.

Undertakings sought by the ITC

1. That management did not discuss the terms of the bid with anyone outside the consortium and its advisers;

2. That the amount of the cash bid was not determined in league with other bidders;

3. That the amount of the cash bid was not disclosed at any time before it was lodged with the ITC;

4. That no agreement was reached with any group under which that group would refrain from entering the bidding;

5. That no agreement was reached with any group under which that group would subsequently withdraw from bidding;

6a. That no agreement was made with any group about the level of any cash bid should there be a rebidding for the licence;

6b. That no agreement was reached with any group about the terms of any rebidding.

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