Channel Five has been offered a deal by the Independent Television Commission that could see its licence fee reduced by more than £20 million per year.
The ITC has offered the channel, controlled by pan-European broadcaster RTL, terms for a new ten year licence that could see it paying considerably less to the Government in the future.
Channel Five currently pays £24.6 million a year for its licence, a sum that is based upon the amount bid when initial applications were made in 1995. Under the new agreement, Channel Five will pay an annual cash sum of £4.4 million, as well as an additional portion of its advertising and sponsorship revenue.
The ITC claims that the move towards charging a lower up front-fee with the majority of tender payments derived from ad revenue, is more responsive to changes in market conditions. Under the new deal, if revenues fall below expectations then tender payments will also fall.
Chairman of the ITC, Sir Robin Biggam, said: “In setting the financial terms the ITC has looked to ensure that Channel Five can continue to provide a range of services to viewers whilst providing a fair return to the Treasury for the right to broadcast. The terms have been derived from a realistic assessment of the value of the licence in an increasingly competitive market and a number of different scenarios were considered in arriving at these terms.”
Channel Five has prospered since its launch in 1997 and under the guidance of former chief executive, Dawn Airey, has developed into a serious player in the terrestrial TV market. Despite gaining a reputation for down market programming in its early days, the channel is competing well against its commercial rivals, with both its share of viewing and advertising revenue increasing significantly over the last five years.
Earlier this week, a group of academics called on the Government to introduce an amendment to the Communications Bill that would protect Five from being bought by a major newspaper owner (see Academics Call For Five Protection In Comms Bill).
