Start-up costs of Channel 5 'halved': Video recorders can be retuned for less than pounds 20m, consortium claims

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RE-TUNING video recorders to enable the launch of Channel 5, a new national television channel, would cost less than pounds 20m, according to the MAI/Pearson/Time Warner consortium that wants to bid for the franchise.

The prohibitive costs of C5 interference and the resulting re-tuning of millions of video recorders - at an estimated cost of more than pounds 70m - were the reason the franchise was not awarded when it was first advertised in 1992.

The Independent Television Commission and the departments of National Heritage and Trade and Industry will meet soon to decide whether to re-advertise it. The consortium said its latest research showed that interference could be limited to about four million homes, with only a handful needing a new aerial to receive the channel. It saw the start-up costs of the new channel halving to pounds 80m- pounds 100m.

The consortium also disputes claims, principally from the ITV companies and the BBC, that re- advertising C5 would undermine the prospects for introducing digital television by tying up valuable frequency space. It said its proposal envisaged using only one of two frequencies allocated to C5, leaving the other free for between four and eight new digital stations.

Lord Hollick, MAI's managing director, argued that digital television and C5 could co-exist. 'We could have the best of both worlds.'

But the consortium also says digital television is probably 15 years away, based on untried technology, will be limited to viewers who can afford an expensive converter for their television set and could undermine regional ITV and BBC broadcasting.

In contrast, C5 could be on air by the autumn of next year, would enable small-scale local programming and advertising, and would be free to viewers.

Using one frequency would enable C5 to reach only about 67 per cent of the population, rather than 73 per cent as originally expected, however. Tom McGrath of Time Warner said the South-east would be poorly served, as would the area covered by the Meridian ITV franchise, owned by MAI.

In 1992 the only applicant for the C5 licence was a consortium headed by Thames TV, now owned by Pearson. The ITC is understood to be keen to re-advertise the channel - it is in any case bound to do so.

(Photograph omitted)