ITN to fight off Sky bid for £43m TV news contract

Rupert Murdoch's Sky television will next week attempt to change the face of news on ITV by wresting the £43m contract from ITN to provide news for ITV, Channel 4 and Channel 5.

ITV will put out tenders for the contract, which is up for renewal in 2002. If Sky is successful with its bid, the careers of familiar faces including Sir Trevor McDonald and Katie Derham could be threatened. Sky's newscasters would hope to replace them as the faces of commercial television news.

But the more likely scenario is that Sky will tell ITV it would keep ITN's star newscasters if it wins the contract, to guarantee continuity and viewer approval.

Although ITN has diversified recently, providing a 24-hour news channel, news bulletins for commercial stations and news services to mobile phones, the loss of the ITV contract would be a devastating blow.

Sky's main hope is to undercut the price of the ITN service. To try to win the ITV contract, Sky has joined four other broadcasters: Chrysalis, the television production and radio company has signed up for the fight, as has Bloomberg, the international financial news operation, and CBS, the American television network. Bringing up the rear is Ulster TV.

If ITV awarded the contract to the Sky consortium, then, as one ITV executive put it: "ITN would implode; it would fail to be a proper company." Despite efforts to diversify, the ITV news contract is still more than 40 per cent of ITN's turnover.

But ITV's dominant companies Granada and Carlton own 40 per cent of ITN. So they are hardly likely to want to see it implode. For that alone City analysts and television chiefs believe the Sky bid will fail.

ITN remains bullish about winning a renewal of the five-year contract. Sources there said it had beaten off Sky for the Channel 4 contract in 1997 and the Channel 5 contract in 1999, that they had been going since 1955 and Sky had yet to win a contract for a tailored news programme.

Certainly, the belief among users of ITN news is that it will retain the contract. Dawn Airey, chief executive of Channel 5, told the Broadcasting Press Guild Sky would not wrest the contract from ITN.

Ironically, Ms Airey's predecessor at Channel 5, David Elstein, did contemplate switching the channel's news service to Sky when they came in with a bid that was literally half the price of the ITN service. But Mr Elstein was overruled by his board, chaired at the time by Greg Dyke, now director-general of the BBC.