Licence review set to net ITV firms millions in licence review

ITV companies are set to boost their profits by tens of millions of pounds a year if preliminary talks with the Independent Television Commission about the early renewal of their licences are successful. The Channel 3 companies are trying to secure reductions in the levies they give to the Treasury, with some seeking to halve their payments.

The prospect of sharply reduced licence payments for ITV companies will highlight the value of television companies in a sector where share prices have already soared on takeover speculation.

Commercial broadcasters which made high cash bids in 1991 to ensure their existing franchises were retained are likely to benefit most from the licence renegotiations.

Analysts reckon that HTV, the ITV company for Wales and the west of England, could end up paying as little as pounds 10m-pounds 12m for its licence compared with a current annual levy of pounds 24m. On a similar basis Yorkshire-Tyne Tees could see its total franchise payments slashed by over pounds 30m. Other companies set to gain include United News & Media, holder of the Meridian and Anglia licences; Carlton, owner of the weekday London licence; and GMTV, the breakfast television operator.

"This will completely revalue ITV companies," said a senior industry source familiar with the talks.

The Government receives pounds 400m a year in payments from the 15 regional ITV franchises and shareholders in GMTV. But under ITC rules the lower levies could kick in as early as the start of 1999 - four years before the current 10-year licences expire - and run until 2009.

Companies like Scottish Television and Carlton-owned Central, which bid just pounds 2,000 to retain their existing franchises back in 1991, are expected to wait until 2003 before seeking to renew their licences with the ITC.

"Senior staff are looking at this issue," an ITC spokeswoman said. "No business plans have been submitted yet but we would expect to see some before the end of this year."

The ITC has the power to re-advertise licences to outside bidders if no deal on renewal payments is reached with existing ITV franchise holders.

In practice, though, compromise is in the air. "It is in everybody's interest to reach an agreement," said the industry source. "We fully expect a significant licence reduction, it is just a question at what level."

Those sentiments have been echoed by recent statements from the top brass within the ITC. Sir Peter Rogers, its chief executive, told MPs last month that he expected the level of payments to come down when the licences were renewed. Sir George Russell, the ITC chairman, is on record as saying the cash bids ITV stations made in the discredited auction six years ago years ago are antiquated and should be scrapped.

Growing pressure to cut the amount of ITV money going to the Treasury reflects the significant competitive changes that have occurred in television since the contracts were awarded in 1991.

In particular, the ITC will take account of the phenomenal growth of satellite and cable channels, as well as the phasing out of the Channel 4 levy, the imminent launch of Channel 5, and, by the end of this year, 200-channel digital television.

Both HTV and Yorkshire are prime takeover candidates. Lord Hollick's United News & Media sits on a 29.9 per cent stake in HTV - the maximum allowed without triggering a full bid - while Granada has 27 per cent of Yorkshire and has made no secret of its desire to acquire its neighbour across the Pennines.

The problem for potential bidders is estimating how much their target's licence is worth if annual levies are slashed. Bidders could end up having to pay a lot more than they originally planned, sources suggest.

The soaring value of ITV licences contrasts sharply with the situation in 1991 when HTV was forced to bid pounds 20.5m to retain its franchise against three rivals and some analysts thought it would struggle to survive.

Instead, the shares have been one of the best performers on the stock market, rising from a low of 14p in 1992 to Friday's closing price of 361.5p. It will today announce a production alliance with Warner Brothers.

Suggested Topics
Voices
Scotland's First Minister Alex Salmond delivers his speech at the Scottish National Party (SNP) Spring Conference in Aberdeen, Scotland April 12, 2014.
voices
Arts & Entertainment
Jessica Pare as Megan Draper and Jon Hamm as the troubled, melancholy Don Draper
tvAnd six other questions we hope Mad Men series seven will answer
Life & Style
The new low cost smartphone of Motorola, 'Motorola Moto G', is displayed in Sao Paulo, Brazil on November 13, 2013. The smartphone, with dimensions 65.9mm W x 129.9mm H x 6.0 - 11.6mm D is equipped with a Qualcomm Snapdragon 400 with quad-core 1,2 GHz CPU, a 4.5-inch display and Android Operating System 4.3 and a suggested price of $ 179 USD.
techData assessing smartphones has revealed tens of millions of phones are at risk of being harvested
News
David Beckham is planning to build a stadium in Miami’s port for a new football team he will own
news... in his fight for a football stadium in Miami's port area
VIDEO
News
weird newsMan live-photographs cracking of mysterious locked box on Reddit
Sport
Oliver Giroud kisses the Arsenal badge after giving the Gunners the lead
sportArsenal 3 West Ham 1: Two goals from the German striker and one piece of brilliance from Giroud puts the Gunners back above Everton
News
Plans to decriminalise non-payment of television licence fees would cost the BBC £500m according to estimates drawn up within the Corporation
people
News
weird news
Arts & Entertainment
Seeing red: James Dean with Sal Mineo in 'Rebel without a Cause'
filmAs 'Rebel without a Cause' is re-released, Geoffrey Macnab reveals how its star James Dean perfected his moody act
News
Obesity surgery in rats has been found to change the way the body processes alcohol
news
Arts & Entertainment
Heads up: Andy Scott's The Kelpies in Falkirk
artThe Kelpies are the latest addition to a growing army of giant sculptures. But naysayers are asking what a pair of gigantic horse heads tells us about Falkirk?
Life & Style
US Airways has been at the centre of a Twitter storm after it responded to customer complaints with a graphic sexual image
techUS Airways takes an interesting approach to customer service
Arts & Entertainment
Philip Arditti as Yossarian and Christopher Price as Milo Minderbinder in Northern Stage's 'Catch-22'
theatre
Arts & Entertainment
The Purple Wedding: Joffrey and Margaery Tyrell tie the knot
TV The second episode of the hit series featured a surprise for viewers
Life & Style
Back to nature: women with body issues have found naked yoga sessions therapeutic
lifeDoing poses in the altogether is already big in the US, and now it’s landed here – in mixed classes
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Management Consultancy - Operational Research Analysts

£35000 - £50000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...

Corporate Actions Consultant - Market data, ISO15022, presales

£45000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: Corporate Acti...

Prudential Risk/Operational Risk Associate - London

£350 - £400 per day: Harrington Starr: An opportunity has arisen at a FCA regu...

PhD/MSc educated Operational Research Analysts - Consultancy!

£35000 - £50000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...

Day In a Page

Homelessness: Why is the supported lodgings lifeline under threat?

Why is the supported lodgings lifeline under threat?

Zubairi Sentongo swapped poverty in Uganda for homelessness in Britain. But a YMCA scheme connected him with a couple offering warmth and shelter
A History of the First World War in 100 Moments: When the world’s biggest shed took over Regent’s Park

A History of the First World War in 100 Moments

When the world’s biggest shed took over Regent’s Park
The pain of IVF

The pain of IVF

As an Italian woman vows to keep the babies from someone else’s eggs, Julian Baggini ponders how the reality of childbirth is often messier than the natural ideal
Supersize art

Is big better? Britain's latest super-sized art

The Kelpies are the latest addition to a growing army of giant sculptures. But naysayers are asking what a pair of gigantic horse heads tells us about Falkirk?
James Dean: Back on the big screen

James Dean: Back on the big screen

As 'Rebel without a Cause' is re-released, Geoffrey Macnab reveals how its star perfected his moody act
Catch-22: How the cult classic was adapted for the stage

How a cult classic was adapted for the stage

More than half a century after it was published 'Catch-22' will make its British stage debut next week
10 best activity books for children

10 best activity books for children

Keep little ones busy this bank holiday with one of these creative, educational and fun books
Arsenal 3 West Ham United 1: Five things we learnt from the battle between the London sides

Five things we learnt from Arsenal's win over West Ham

Arsenal still in driving seat for Champions League spot and Carroll can make late charge into England’s World Cup squad
Copa del Rey final: Barcelona are paying for their complacency and not even victory over Real Madrid will put things right

Pete Jenson on the Copa del Rey final

Barcelona are paying for their complacency and not even victory over Real Madrid will put things right
Rafa to reign? Ten issues clay courts will serve up this season

Rafa to reign? Ten issues clay courts will serve up this season

With the tennis circus now rolling on to the slowest surface, Paul Newman highlights who'll be making the headlines – and why
Exclusive: NHS faces financial disaster in 2015 as politicians urged to find radical solution

NHS faces financial disaster in 2015

Politicians urged to find radical solution
Ukraine crisis: How spontaneous are the pro-Russian protests breaking out in Ukraine’s east?

Ukraine crisis

How spontaneous are the pro-Russian protests breaking out in Ukraine’s east?
A History of the First World War in 100 moments: The first execution at the Tower of London for 167 years

The first execution at the Tower of London for 167 years

A history of the First World War in 100 moments
Fires could turn Amazon rainforest into a desert as human activity and climate change threaten ‘lungs of the world’, says study

New threat to the Amazon rainforest:

Fires that scorch the ‘lungs of the Earth’
Liverpool, Chelsea and Manchester City: And the winner of this season’s Premier League title will be...

Who’s in box seat now? The winner of the title will be ...

Who is in best shape to take the Premier League prize?