Virgin leads bid for Channel Five

Virgin Communications, Richard Branson's media company, confirmed yesterday it was leading a consortium to bid for the new Channel Five licence. Its partners are Associated Newspapers, publisher of the Daily Mail, the Mail on Sunday and the Evening Standard, the electronics giant Philips and HTV, the ITV licence holder for Wales and the West. Electra, the quoted investment trust is also supporting the bid.

Despite media cross-ownership restrictions that ostensibly limit Associated Newspapers to a 5 per cent stake in Channel Five, it is understood that the publisher will propose taking 20 per cent, perhaps with reduced voting control, if the bid is accepted.

It is widely assumed that the Government will liberalise the ownership restrictions, particularly those limiting newspaper publishers with a stake in an ITV company to a maximum of 5 per cent in a second licence- holder.

Declining to provide details on its planned programming, a Virgin spokesman said the approach would be "innovative". Most analysts expect the new channel to resemble ITV, the commercial Channel Three service, with an emphasis on light entertainment, drama and soap operas.

"Our target audience is definitely ITV's audience but we aim to be distinct," Sir David English, chairman of Associated Newspapers, said.

The Virgin consortium joins three rival bidders for the licence, to be awarded by the Independent Television Commission later this year. BSkyB, the satellite and cable company owned 40 per cent by Rupert Murdoch, is teaming up with Granada, the ITV licence holder and TV production company, and TCI, the US cable giant.

Pearson, the media and information company that publishes the Financial Times, is working with the financial services and media company MAI and the European broadcaster CLT. Pearson television last week bought the Australian production company Grundy Worldwide, in part to develop programmes for Channel Five.

A fourth consortium, headed by Mirror Group, includes the US network NBC and the TV producer SelecTV. Mirror Group is less than three months away from launching a new cable channel, LiveTV, which will feature middle- brow, popular programming similar to what is expected on Channel Five.

Mirror Group and Pearson are technically limited to a 5 per cent stake in Channel Five, but both are expected to propose taking higher shares in anticipation of a relaxation of the rules. News International, which publishes five national titles and is the largest shareholder in BSkyB, does not have a stake in an ITV company. As a result, BSkyB could take up to 20 per cent of Channel Five under current rules.

A Virgin spokesman said yesterday that the company and its partners would make a strong commitment to new UK programming, using the independent television sector.