Mathew Horsman on the media
Tuesday 19 March 1996
Today in the Lords, the Government is expected to introduce an amendment to the Broadcasting Bill, outlining precisely how newscasters can go about launching a competing news service to ITN, currently the monopoly news provider for the ITV (Channel 3) network, and the makers of the flagship news programme fronted by Mr McDonald.
The 1990 Broadcasting Act marked the introduction of the idea of having more than one news provider for commercial television, on the Thatcherite assumption that competition would work just as well for news as for, say, telephones, electricity or gas.
Now, under pressure from ITN and opposition peers, the Government is planning to insist that a single newscaster provide all of Channel 3's news needs, to ensure that the whole country gets a quality national broadcast simultaneously. That will head off any attempt by BSkyB or other broadcasters to pitch for just a part of the news contract - for instance, the early bulletins - or for just a few regions in the ITV network.
Still, the door will be left open to competition from other suppliers for the entire ITV news business; worth about pounds 57m this year. Mr Murdoch will be among the bidders.
If all goes as expected, BSkyB, along with four ITV companies and the financial information company Reuters, plan to submit an application to the Independent Television Commission to become a "nominated news provider", and thereafter pitch for the Channel 3 contract.
The hurdle isn't too high. According to the ITC, the bidders would have to describe the service they intend to supply, provide proof of resources and outline how the service would affect the ITV system. BSkyB already has a news service, Sky, up and running, which is partially supplied by Reuters. It may not be the best news in the world, but it is better than it was a few years ago - and getting better all the time.
On the issue of financial resources, Sky's four ITV backers, led by HTV and Yorkshire-Tyne Tees, are prepared to invest equity in the venture. The great advantage will be price. BSkyB has already let it be known that it could provide a full news service for just pounds 30m a year, just under half the amount the ITV companies currently pay to Independent Television News.
ITN is, of course, sniffy about Sky's figures, questioning just what ITV can expect for pounds 30m. They don't like you to remind them that ITN supplies Channel 4 with its news service for just pounds 16m a year, and will also provide services to the new Channel 5, due to be launched next year, for just under pounds 5m a year. It helps to have a near-monopoly, with the big ITV contract as your anchor. (Working a monopoly is, of course, something Mr Murdoch's Sky knows all about.)
Both HTV and YTT are unhappy with the price ITN currently charges the ITV network, and have questioned ITN's southern England bias. "This is a democracy," Ward Thomas, the Yorkshire chairman, has said. "There should be plurality in a democracy." Brave words. But there is a hidden agenda at work that the dissenting ITV companies don't like to address.
ITN is quite rightly suspicious of the fact that the four ITV companies backing Sky News, YTT, HTV and the two licence holders owned by Lord Hollick's MAI, Anglia and Meridian, were all negotiating last year for a stake in ITN but could not agree a price.
Two giant ITV companies, Carlton and Granada, each own 36 per cent of ITN, despite regulations limiting any individual stake to 20 per cent. They took on the extra shares following their acquisition, respectively, of Central and LWT two years ago. Despite pressures from the ITC, the two companies held their ground, refusing to sell the excess stakes at what they viewed to be low-ball bids from the likes of YTT and HTV.
(Cynics also suggest that the four dissenting ITV companies are more interested in pressurising ITN into lowering its contract price than in fomenting "plurality").
Whatever the motives of the ITV companies, BSkyB for one takes the idea of providing news to Channel 3 very seriously. In the United States, Mr Murdoch is launching his own 24-hour news service to compete with Ted Turner's Cable News Network and will improve the standards on Sky News here.
The partners are keeping their plans well under wraps. But hints dropped here and there suggest they would supply a credible, if somewhat pedestrian, service - not as good, maybe, as the best of News at Ten, but decent.
Will the ITV companies bite? The chances of Sky actually wresting the contract away from ITN are remote. A more likely outcome is for the dissenting ITV companies to come to an agreement with Granada and Carlton on the excess shares, and for ITN to knock a few million off the current contract when it comes up for renegotiation next year.
Whatever, Sky is certainly intent on its plans to expand news services in the UK. ITN will face a formidable competitor in the next few years, as the demand for electronic news expands. If, as is likely, Sky gets the nod from the ITC as a "nominated" news provider, it will be free to compete with ITN for Channel 4 and Channel 5 as well, when those contracts come up for grabs.
So, Trevor McDonald is probably safe for now. But Sky is gunning for a greater share of the total news market in the UK. And ITN should know better than to underestimate Rupert Murdoch's resolve.
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