Cost of Channel 5 retuning may top pounds 100m

The budget for retuning video recorders for the new Channel 5 service could soar to as high as pounds 100m, one of the channel's backers confirmed yesterday, writes Mathew Horsman. Pearson, which has a 24 per cent stake in the fifth terrestrial service, will capitalise its share of the pounds 100m provision, and amortise it, the company's finance director, John Makinson said yesterday.

The figure is sharply higher than the pounds 55m originally budgeted by Channel 5, in which United News & Media and CLT also have stakes.

It also emerged yesterday that Telewest Communications, the country's largest cable company, is days away from agreeing a special contract with Channel 5 to retune video recorders in its franchise areas. Such an arrangement could help cap Channel 5's retuning costs. Other cable operators have also held talks about offering retuning services.

The news coincided with the publication of Telewest's interim figures, which analysts said were a little below expectations. Revenue was up 59 per cent year on year in the first half, to pounds 133.5m, including the results of the merger of Telewest and SBC CableComms last year. Losses climbed to pounds 117m, as the costs of network building continued to eat into revenues. The company said it was on schedule to go into positive operating cash flow this year.

The results were the first under the acting chief executive, Stephen Davidson, who took over from Alan Michels last week.

He is expected to be confirmed in the position by the end of the year, and is in line to see his salary increased "substantially" in two phases: an immediate increase to reflect his "acting CEO status" and a further, retroactive rise following confirmation of his position at the end of the year.