Digital TV fee to replace franchise auction

MAGGIE BROWN and

RHYS WILLIAMS

The Government is expected to abandon the discredited system of auctioning television franchises to the highest bidders when licences are allocated for digital television.

Informed sources say the Independent Television Commission, with Department of National Heritage officials, havelooked at charging a fee for the right to operate rather than sticking with a blind auction.

Existing terrestrial broadcasters - ITV, the BBC and Channel 4 - are due to get an extra terrestrial channel each.

The Government is expected to issue a policy document on licensing digital television and the privatisation of the BBC's transmitter network next month.

The debacle of Channel 5, which attracted two equal bids and a huge range of valuations, has contributed to the determined search for a better way. The blind auction, which also led to an unsatisfactory allocation of ITV franchises in 1991, became a dogma of Tory government thinking in the Eighties.

Michael Grade, Channel 4's chief executive, yesterday warned of a new era in which newspaper groups with expanding cross-media interests would brazenly plug their broadcasting ventures in editorial columns.

Addressing a European Policy Forum convened by the European Commission in London, he welcomed the government relaxation of rules on cross-media ownership; newspaper groups with less than 20 per cent of national circulation may own a terrestrial television licence. Accepting there was little danger of press editorial bias being replicated on screen, he said cross-media promotion would be the "hotter" issue.

t Sir David Puttnam, chairman of Enigma Productions and award-winning maker of Chariots Of Fire, warned unless there is significant investment in training and in Britain's film and television production base, Europe's pounds 4.5bn audio-visual trade deficit with the US would more than double by 2000.