According to sources close to the contract negotiations, ITN is prepared to reduce the annual cost of the news service to pounds 42m from an estimated pounds 58m, starting in 1998.
This emerged as ITN confirmed a sharp improvement in pre-tax profits to pounds 15.3m from pounds 9.4m, fuelled by new contracts and higher rental income from its headquarters. ITN chief executive, Stuart Purvis, said the fruits of the improved performance would be shared with ITV.
ITN, which supplies ITV, Channel 4 and Independent Radio News, will also provide news services to the new Channel 5, when it is launched next year.
Despite the promise of lower contract fees, three ITV companies continued to press yesterday for fresh negotiations on price and terms. One senior ITV source said: "We aren't interested in anything that doesn't begin with a three."
HTV, Yorkshire-Tyne Tees, and Lord Hollick's Meridian and Anglia have all pushed for lower payments, and have publicly backed a consortium led by BSkyB, Rupert Murdoch's pay-TV broadcaster, which has said it could supply ITV news for just pounds 30m a year. ITN is backed by Granada and Carlton, which each hold 26 per cent stakes. These must be lowered to 20 per cent under broadcast rules.
A Government amendment to the Broadcasting Bill, tabled this week, makes it easier to apply for nominated status as a news provider, but requires that the ITV companies choose a single news supplier for the entire network.