No - it's not boring. Digital terrestrial TV will give us vital new choices

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The Independent Online
There are two times of year - Christmas and August - when the media business in the UK more or less shuts down. But that won't be the case for a few hapless souls at a handful of media companies, where intensive work is under way to prepare bid documents for digital terrestrial television licences.

Still with me? I know, I know, that dreaded word "digital" is snooze- provoking. But the DTT licences are a key part of the Government's efforts to kickstart the digital revolution, which promises greater consumer choice, a richer menu of programmes and services, and higher quality broadcasts. Digital will be a "good thing" if it ever gets off the ground.

The Independent Television Commission has given companies until the end of January to bid for four "multiplex" licences, each capable of supporting perhaps five "channels" or services (home shopping networks, for example, or even home banking).

In order to encourage applicants, there will be no cash bid initially for DTT - although a small fee will be required and a non-refundable pounds 100,000 payment must accompany all applications. In addition, detailed programming information will be demanded of all applicants.

The four licences are part of a six-multiplex system for digital terrestrial TV (the other two have been gifted to the BBC and to ITV and Channel 4 jointly). Of the commercially available licences, one will have two "sitting tenants" in the form of Channel 5 and S4C, the Welsh public service broadcaster, and will have to provide Gaelic programmes for Scotland.

So who is going to bid? That question has been on the lips of many media types, and not just journalists. So far, the likely candidates make for a short list. Far longer is the list of those who think the whole idea barmy.

Among the ITV companies, which in any event have agreed to take up their guaranteed capacity on the ITV/Channel 4 multiplex, interest is muted indeed. Granada, a broadcasting and production powerhouse, thinks DTT is a non-starter. They are far more likely to want to launch digital satellite channels, as part of their existing satellite joint venture with BSkyB, Rupert Murdoch's pay-TV company. Yorkshire-Tyne Tees is similarly bearish about DTT's prospects, believing it to be too expensive for what it will bring consumers.

The companies share the view that BSkyB's digital satellite service, supported by a set-top box using Murdoch's proprietary software, will attract all those eager to get in on the digital revolution from the start. Once Murdoch's 200-channel service (movies, sport, niche programming, probably even the BBC's pay-TV channels) is available, by late 1997 or early 1998, then who will want, say, 30 channels on DTT?

Still, it appears at least a few companies are going to make a go of it. Carlton, Michael Green's media company, and the owner of the Westcountry, Central and London weekday ITV licences, is thought very likely to bid for a multiplex, or maybe as many as three. A consortium backed by a leading merchant bank is also putting together a bid (of which more in coming columns). International CableTel, the American-owned cable company that recently bought the transmission company NTL, is also a likely applicant.

BT, the telecoms giant, has written to all and sundry, offering transmission and other services, but is not expected to bid to operate a multiplex. Teletext, which provides the text services on ITV, Channel 4 and some cable and satellite channels, is also looking to take part, but as a service provider, rather than as an operator.

Thereafter, the pickings look slim. BSkyB hasn't ruled out the option, but the appetite looks weak. Similarly, United News & Media, Lord Hollick's media, exhibitions and financial services conglomerate, is still looking, but with only faint enthusiasm. United sees a possible market in DTT for sport and movies, provided the rights can be secured. But most of the rights to the best sport are already tied up - by Murdoch, of course.

There are also rumours of a possible bid from a big US media company, perhaps in league with a UK partner. But don't hold your breath.

Prognosis? There may still be six weeks before the deadline, but I suspect the ITC is not going to be inundated with applications. There are still too many risks in the digital revolution, not least the effect of an early launch of BSkyB's direct-to-home service.

Still on the subject of television, word reaches us of a whispering campaign against Flextech, the cable and satellite programme packager, which is BBC's chosen partner for the launch of the new BBC pay-TV channels. These will cost about pounds 140m over four years to finance, all of which is meant to be stumped up by Flextech. The Beeb, for its part, delivers the programme library. Rival companies are saying that Flextech, which has never made a profit, hasn't got the dosh.

That doesn't seem right to me. It has no debt, money in the bank, and at least two prime assets against which any financial institution would be willing to lend - namely, a 20 per cent stake in Scottish Television, worth pounds 80m, and a controlling stake (soon to be 100 per cent) of two popular pay-TV channels, UK Gold and UK Living, valued at about pounds 200m. Surely enough to be getting on with?

And the BBC channels are obviously attractive in and of themselves. No wonder there was such a furious bidding war between Flextech and BSkyB over who would emerge as the preferred private-sector partner. No prizes, then, for guessing the provenance of some of the anti-Flextech mutterings - beautiful downtown Isleworth (home to ... yeah, that's right)n