Virgin to seek review of Channel 5 award

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The Independent Online

Media Editor

Virgin TV will seek judicial review of the award of the Channel 5 licence, it was disclosed last night.

On the basis of what it called robust legal advice, the consortium, whose bid was rejected on quality grounds, will petition the High Court for the right to seek a reversal of the award, made last month by the Independent Television Commission.

A spokesman for the consortium, backed by Richard Branson's Virgin group, declined to comment further. But it is believed that legal advice, prepared by Anthony Scrivener QC, suggested that there were several issues on which the ITC had possibly erred when it passed over the Virgin-led bid. These include specific points such as the number of independent producers lined up by Virgin TV as well as the funding requirements of the group's proposals for news services.

The ITC said last night that it was "confident that the Channel 5 award was made fairly. Virgin TV is certainly entitled to proceed as it sees fit."

Legal counsel was also believed to support a contention by members of the Virgin consortium that other bidders, notably the winner, Channel 5 Broadcasting, had been given an opportunity to change the terms of part of their bid after submission.

The group believes that the winners, backed by Pearson and MAI, were allowed to make promises of pounds 100m in additional financing to cover the worst-case scenario in its business plan. Pearson has said the change was a "clarification".

The award drew criticism from two bidders that had failed to pass the ITC's thresholds. The highest offer for the 10-year licence, from a Canadian- backed consortium, UKTV, was also rejected on quality grounds.

Last week, UKTV, which offered pounds 36m for the licence, said it would not seek judicial review. It openly criticised certain aspects of the decision, however.

It was not immediately clear what effect a successful review of the decision would have. Virgin and Pearson both bid exactly the same for the licence - pounds 22,002,000. If the Virgin bid was subsequently passed on review, a rebid might be necessary.

The only other bidder to have passed the quality threshold was New Century Television, backed, in part, by BSkyB, the satellite broadcaster owned 40 per cent by Rupert Murdoch's News Corporation.

The ITC has never been successfully challenged over its decisions, and industry observers suggested last night the basis of Virgin TV's rejection - quality - was so subjective as to be virtually impossible to overturn.