Channel 5 rivals get warning over bids

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The Independent Online

Media Correspondent

The Independent Television Commission is to seek undertakings from two rival consortia who submitted identical bids for the new Channel 5 licence that they did not collude.

Following a meeting of its members yesterday, the commission announced it wanted "firm and binding" reassurances from Channel 5 Broadcasting and Virgin TV, both of whom bid pounds 22,002,000 for the licence, that they did not share information in preparing their submissions a fortnight ago.

In the teeth of widespread industry scepticism, both consortia have insisted that their matching bids were a coincidence. Suspicion grew when it emerged that on the morning of the deadline for bids, Channel 5 Broadcasting, which is led by Pearson and MAI, upped its offer by pounds 1,000.

The commission said in a statement that any collusion "which undermined the competitive tendering process to the disadvantage of other applicants" would be "wholly unacceptable". It added: "Applicants who were found to have colluded ... would be regarded by the commission as not being fit and proper persons to hold a licence. Their applications would be rejected and if any such collusion came to light after the grant of a licence, that licence would revoked."

Under the1990 Broadcasting Act, the commission is obliged to award the Channel 5 licence to the highest bidder provided it meets quality thresholds and has a sound business plan. New Century Television, which included Rupert Murdoch's BSkyB and Granada, confounded industry expectation and bid the lowest with pounds 2m, while UK TV, a surprise late contender backed by Canadian broadcaster CanWest and the British independent producer SelecTV, topped the bidding with pounds 36m.

Robert Devereux, chairman of Virgin TV, welcomed the commission's initiative, adding: "We will furnish whatever undertakings are required."

In the meantime, an independent inquiry is under way into how Coopers & Lybrand acted as reporting accountants for Channel 5 Broadcasting on its bid, while its management consultancy arm advised Virgin TV. The findings of the inquiry will be passed to the commission.