Ofcom launches ITV licence review

Hopes for a change in the way ITV licences are awarded helped shares in Carlton Communications rise nearly 5 per cent per cent yesterday as investors anticipated substantial regulatory cost savings for the newly merged companies.

Granada, Carlton's merger partner, saw its shares remain at 133p yesterday when it also went ex-dividend, an event that would normally be expected to lead to a share price fall of 6p-7p. A review of the licensing process, announced yesterday by Ofcom, is expected to reduce the £475m annual regulatory bill the ITV franchise incurs.

An Ofcom spokesman said: "Anything we can do to reduce the regulatory burden for companies and allow them to reduce their cost base has to be a good thing."

Part of the expected savings could be delivered from a more streamlined approach to the renewal process. But analysts are also expecting the licences to get cheaper when Ofcom launches a second part to its review this summer. In June it plans to review how the price of the licences are calculated.

Based on evidence from previous licence renewals for Channel 4 and Five, some analysts expect the amount that ITV companies pay in future renewals to use the analogue spectrum will be likely to fall.

Ofcom said it wasproposing to align the licence review periods for all 16 ITV licences so that all reviews can begin from 31 December, 2004.