ITV Set For Massive Licence Fee Cuts

Reports this morning suggest a cut in ITV’s licence fees of around £100 million could be awarded this week, as Ofcom prepares to review the broadcaster’s licence before awarding a new one.

The new agreement, spanning seven years, will take ITV through the digital switchover process, ending in 2012, when the analogue signal is due to expire.

ITV currently pays over £200 million each year, although Ofcom’s new pricing could see this drop to below the £100 million mark, with Broadcast magazine suggesting a figure of £94 million.

Cuts to ITV’s fees have been rumoured for several months, although the broadcaster also contributes around £250 million through the public service broadcasting quotas included in its franchise terms.

Ofcom’s review will see the regulator set out how it intends to value ITV’s regional licences over the next decade, given that the increase in digital takeup has devalued the broadcaster’s current analogue licences (see ITV Could Receive Boost From 40% Cut In Licence Fees).

Speculation has also suggested that ITV’s public service broadcasting (PSB) obligations will be reduced by Ofcom’s review – a proposal that, while welcomed by ITV (see ITV Welcomes Loosened PSB Requirements), has been the subject of much derision by rival broadcasters (see Thompson Attacks ITV For Neglecting Public Service Remit).

The reduction in PSB requirements, and reduced licence fees, could make ITV an attractive target for a takeover bid, with several American broadcasters, and former BBC director general Greg Dyke, believed to be interested in acquiring the firm.

Dyke was first linked with a possible takeover bid at the beginning of the year, with reports surfacing that a possible bid of £6 billion was being prepared by a conglomerate of investors, including Dyke and Lord Hollick, with venture capitalist Apax also believed to be involved (see Greg Dyke Implicated In ITV Bid Speculation).

ITV: 020 7843 8000 www.itv.com Ofcom: 020 7981 3040 www.ofcom.org.uk