TV-am backs out of Channel 5 bid

TV-AM is withdrawing from a planned bid for Channel 5, the proposed new terrestrial TV channel, fearing it could turn out to be an 'unmitigated disaster'.

It is understood that TV-am was put off by an estimate by British Telecom that it would cost twice as much as originally expected to retune video recorders so they would not be affected by interference from Channel 5. BT had said it could retune videos for the Entertainment Channel, the consortium that TV-am had joined, charging pounds 20 per household. But TV-am said yesterday that BT's final estimates had been far higher than had earlier been indicated.

The announcement comes just six days before next Monday's deadline for bids set by the licensing body, the Independent Television Commission. C5, which will be awarded by auction, will be capable of reaching 74 per cent of the population through aerials, although a satellite could be used to fill in other areas.

It now looks as if there may be only one bidder left for the franchise, the Five TV consortium, which includes Thames Television, Columbia and Moses Znaimer, a Canadian cable TV expert. Last week Channel S, a consortium backed by Scottish Television, pulled out, saying the costs of setting up were too great. Another interested investor, Silvio Berlusconi, the Italian media magnate, has also withdrawn.

Bruce Gyngell, chairman of TV-am and the Entertainment Channel, said yesterday: 'We've looked at it, crunched the numbers and I have to say, I wouldn't invest in it myself. So why expect institutional investors to? Sir George Russell, (chairman of the ITC) said in April he thought that Channel 5 was at best a headache, at worst a nightmare. Well, at best it's a nightmare, at worst an unmitigated disaster.'

Mr Gyngell, who said that Conrad Black's Telegraph newspaper group and Time Warner of the US were also withdrawing from the project, estimated that it would cost pounds 100m to set up transmitters and to retune videos and home computers affected by the new service.

Sources at TV-am also said that it had been shocked by estimates that up to 60 per cent of existing rooftop aerials might have to be replaced in order to receive the new terrestrial channel. This disrupted business plans, which had seen scope for concentrating on London first.

However, David Frost, who organised the bid with Jeremy Fox, a television producer, said yesterday there was still a 50-50 chance it would go ahead. He said a final decision would be made by investors on Sunday.

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