Channel 5 offers cable firms more for retuning

Channel 5 Broadcasting has offered to pay cable operators at least pounds 10 a household to retune video recorders in their franchise areas in advance of the launch of the fifth terrestrial channel next year, writes Mathew Horsman.

The offer could end the stalemate in negotiations between Channel 5 and several cable companies, and may allow a blanket retuning deal for as many as 1 million cable homes to be announced within weeks.

Channel 5, headed by chief executive Ian Ritchie, had been hoping to convince leading operators to handle the retuning exercise in their respective franchise areas, as part of plans to visit 9.6 million homes to prepare receiving equipment for the launch. Millions of VCRs and televisions have to be adjusted to ensure there is no interference when the fifth and final mainstream television channel is introduced 1 January.

The retuning project, involving 7,000 engineers and 380 staff at a special call centre, is already known to be severely over the initial budget of pounds 55m, but farming out the work could take some of the pressure off Channel 5's own specially recruited staff.

The cable talks had foundered mainly on price, with Channel 5 offering as little as pounds 2.50 a household. But sources close to the negotiations warned there were still disagreements over key issues, including Channel 5's demand that cable operators provide guarantees that they will complete a given number of retunings by a specified date.

"Channel 5 has promised the Independent Television Commission that it will complete the exercise in advance of the launch date," a senior source at a leading cable operator said. "Such undertakings haven't got anything to do with us, and we don't want to be involved in commitments to the ITC."

Under the terms of its licence, Channel 5, owned by Pearson Television, United News & Media and CLT, is required to retune 90 per cent of homes in the reception areas before starting transmissions.