'The Channel 5 licence was the last chance to offer something new on a free station. The ITC blew it'

History, said Karl Marx, repeats itself, the first time as tragedy, the second as farce. In 1991, when the Independent Television Commission launched a competitive auction for the Channel 3 (ITV) licences, under the terms of the Thatcherite Broadcasting Act of 1990, there was plenty of tragedy. Mighty Thames, holders of the weekday Channel 3 licence for London, was denied its destiny, replaced by Michael Green's upstart Carlton. Yorkshire Television had to bid an obscenely high licence fee in order to see off the competition, and has had trouble making a sensible profit ever since. Even Bruce Gyngell, whom Margaret Thatcher liked quite well, lost his franchise, TV-AM, to the downmarket GMTV.

And so to the licence for Channel 5, awarded last week. Farce, indeed.

Determined this time to avoid embarassment, criticism and sniping from the rumour-sodden TV industry, the ITC thought it had covered all the bases. First, it would announce the amount of the licence bid on offer from each of the pretenders to the Channel 5 throne as soon as the envelopes were in. Not this time would all the bids be ferreted out by a plugged- in media press corps - as had been the case with the Channel 3 round. Second, the ITC promised it would publish the reasons behind its decision, to preempt any legal challenges and to show how carefully it had done its job.

The approach did not stop the busybodies on the media beat. In a steady stream of articles, we learned, for example, that the group bidding the highest, UKTV (a princely pounds 36m), had been so hastily put together that it ended up with only one solidly British partner, the hapless SelecTV. Allan McKeown's production and broadcasting group, worth a cool pounds 50m on the Stock Exchange, would have to come up with nearly half that amount just to take up its shares in the consortium. (Surprise, surprise - mere weeks before the award was announced, SelecTV put itself up for sale.)

The rest of the consortium had conspicuously close ties to CanWest, the main partner. Not only was the Canadian broadcaster, undoubtedly an internationally successful television company, forced to subscribe for 49 per cent of UKTV, the maximum allowed under the rules, but it had to bring in its closely connnected Channel 10 group in Australia and its good friends at Scandinavian Broadcasting System - despite its name, dominated by US interests. Before Izzy and David Asper, the Canadian duo behind UKTV, get upset, let us quickly point out that unnamed investors (British all) stood by to vouchsafe the investment, in case the ITC thought the bid too "foreign".

The ultimate winners, Channel 5 Broadcasting, created an imaginative ownership structure, that managed, just, to allow Pearson and MAI to take up shares beyond the level ostensibly specified in the Broadcasting Act.

Virgin TV, led by Richard Branson and helped along by Associated Newspapers, ITV licence-holder HTV and US company Paramount raised eyebrows by its use of investment vehicle White Rose (linked to Associated Newspapers).

Alone among the bidders, New Century Television, backed by bogeyman Rupert Murdoch's BSkyB, ITV licence-holder Granada and others, had complied with all the ownership rules, without recourse to fancy lawyer talk. But it bid the lowest of all - a mere pounds 2m a year, next to UKTV's pounds 36m and the (coincidental - really) pounds 22,002,000 offered by Pearson/MAI and Virgin TV.

With all these issues on which to fail one bid or another, what did the ITC do? It decided the issue on the basis of the "quality" threshold. Top bidder UKTV was passed on ownership structure but failed on programmes (this for a company that has launched, successfully, new channels in South America and Canada, and made a go of the fragmented Australian market). Virgin's untried retuning proposals were given the thumbs up, but it was told its programming lacked diversity and that its news was inadequate (this for a company that offered a range of innovative programming and was ready to give hourly news bulletins - albeit of short duration - rather than a half-hour of "more of the same" news coverage that viewers could have watched elsewhere.)

Farce indeed.

One has some sympathy for the ITC: it is a thankless task to try to balance public service broadcasting against the dictates of the market. But we have ended up with an ITV2 for our last terrestrial television channel - there is nothing (and this is precisely what the winners promised) new about Channel 5 with Pearson/MAI at the helm.

So the ITC has blown it. A chance to make sure that Britain's last "free- to-air" channel offered something new for those of us without the means to buy a satellite dish or to subscribe to cable. Granted, within a year, Mr Murdoch's BSkyB will be offering up to 120 channels on digital satellite, and within two to three years, there will be another 18 channels available "free to air" via digital terrestrial television.

But the whole idea was to give us (or at least the 70 per cent of us who can receive the Channel 5 signal) a last free channel before the Fragmentation of British Television is upon us in earnest. And here, the ITC has failed us, miserably.

Channel 5 will make its backers money. It will give us another "mainstream" channel, as a bulwark against Mr Murdoch and his ilk. But a chance to establish a new direction, to ensure that "public service broadcasting" has been enhanced, has not been served. There will be no successful judicial review of the decision, because "programme quality" cannot successfully be challenged. We may well wonder, some years hence, whether this has been the crossroads we missed.