British TV in Disarray

Controversy seethes over major TV companies' lost franchises

COMPANIES representing sizable portions of Britain's television industry are reeling from hammer blows delivered by the Independent Television Commission (ITC), regulator of the commercial side of the industry.The country's 52 million viewers have more than a year to wait before they see the results of the commission's decisions. Operating a controversial new auction system for allocating regional franchises, the ITC rewarded two highly successful companies by telling them to get off the air by 1993. The ITC withdrew the franchises of TV-am, a "breakfast TV" company which turned in a profit of 16 million British pounds ($28.3 million) last year, and Thames Television, the country's largest TV company serving London and the heavily populated southeast of England. It awarded the franchises to largely untested companies. Two smaller companies in southern England were also told that they must give way to competitors, despite having made the highest bids in their regions. The ITC's franchise awards promise to further complicate a TV industry already in a state of disarray as the noncommercial British Broadcasting Corporation (BBC) restructures itself and Rupert Murdoch's British Sky Broadcasting satellite service battles to build its subscriber list. The decision to ax TV-am, which pioneered national commercial TV in Britain during the breakfast hours, drew an apology from Margaret Thatcher, the former prime minister, who had devised the original bidding system under which it lost its franchise. In a letter to Bruce Gyngell, Australian-born chairman of TV-am, Mrs. Thatcher said she was "heartbroken" that he had lost out. "I am only too painfully aware that I was responsible for the legislation," she wrote. Home Secretary Kenneth Baker, whose department regulates the television industry, defended the ITC's decisions. Roy Hattersley, the Labour opposition's home affairs spokesman, dismissed the moves as "a travesty." Richard Brooks, media editor of the weekly Observer newspaper, commented: "Virtually everybody thinks it was a daft and totally unsatisfactory way of choosing the new TV companies. "By United States and continental European standards, the vast majority of Britain's viewers have a highly restricted choice of TV channels: they must make do with only four." The BBC operates two non-commercial channels. Channel Three takes advertisements and is divided up between 10 companies on a regional basis. Channel Four is also commercial and broadcasts nationally. The only other competition comes from satellite stations whose programs are viewed in fewer than 2 million British homes. The ITC's task was to allocate franchises for Channel Three, but it was required to do so under a new law that reflected Thatcher's enthusiasm for injecting a dose of competition into the bidding. "Mrs. Thatcher was determined to break up what she saw as the cozy club of 10 independent franchisees by ordering what amounted to an auction," said Mr. Brooks. "In their original form her ideas would have ensured that the highest bidder got the franchise." In its amended form however the 1990 Broadcasting Act required bidders to meet a "quality" threshold, and it was here that elements of contradiction entered the picture. Granada TV in northwest England retained its franchise with a bid of 9 million British pounds in the face of a rival bid of 35 million British pounds. The ITC later indicated that Granada had won on quality. Central TV, serving the Midlands, learned early on in the bidding that it had no competitors and secured its channel with a token payment of 2000 British pounds. Thames and TV-am were knocked out of the action by substantially higher bids, but the ITC did not explain on what basis the successful bidders - Carlton Communications and Sunrise TV - had demonstrated that their programs would be of a higher quality than the losers'. For over 22 years, Thames has produced some of Britain's most successful television. Now, if Thames has a future, it will be as a program provider to other channels. While British viewers - particularly those in the south - await the impact of the reallocation of franchises, the BBC, which has been a public-service broadcaster for 60 years, is undergoing extensive changes of its own. Three years ago it reorganized to compete with Independent Television News, a commercial operator providing news programs for the regional commercial companies. John Birt, who masterminded the BBC changes, was appointed director-general and will take over in 1993, just as the commercial companies begin operating the new franchises. The BBC is financed mainly from a 70 British pounds annual license fee which every owner of a TV set must pay. Mr. Birt is under pressure to make the BBC leaner and more cost effective. The most startling of the BBC's latest moves will not be seen by viewers in Britain: an ambitious challenge to Cable News Network, the international TV service based in Atlanta. Last month the BBC launched World Service Television (WST), a news channel beamed 24 hours a day to 38 countries in Asia and the Middle East with a total population of 2.5 billion. John Tusa, the senior BBC executive in charge of its global operations, said WST service would be extended to Africa in a year or two. "We have plans for North America after that," he said.

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