ITV/Channel 4 Digital Bid May Have The Edge, Says Merrill Lynch
The digital terrestrial television (DTT) licence bid by ITV and Channel 4 may just have the edge over rival proposals, according to analysts at Merrill Lynch.
The Consortium (BBC/Crown Castle/BSkyB) Digital Terrestrial Alliance (DTA) (ITV/Channel 4) Apax Partners SDN (S4C/United Business Media/NTL)
The DTA’s application is dependent on a separate bid by Freeview Plus being successful (and vice-versa).
Merrill Lynch says that Apax Partners and SDN have no ‘baggage’, but do not have any content proposals and would act primarily as bandwidth resellers. This lack of demonstrable content and programming means that the ITC is less likely to award the licence to each of these bidders, says the broker. The BBC and ITV consortia, on the other hand, are in very close competition.
The two bids agree on most key issues, including the need for the consumer to pay for their digital equipment (either an adapter for £99 or an idTV), transmission frequency and free-to-air programming line-ups. However, the consortia are in disagreement over a number of issues as shown, with Merrill Lynch analysts’ comment.
The pros and cons of the two bids are finely balanced, say Merrill analysts, who reckon that the DTA/Freeview Plus may have the edge, as long as confidence can be obtained over the signal quality of five channels per multiplex. In the BBC’s favour is a less risky proposal, with fewer channels and no pay element. Less favourably is its non-conciliatory and domineering tone, say analysts.
What is not in ITV’s favour is the return of Carlton and Granada to the DTT market after having failed to successfully operate ITV Digital. However, the DTA/Freeview Plus application is in a non-antagonistic position vis-à-vis Sky Digital and there will be no set-top box giveaway as before. In addition, the broker believes that the pay-TV Lite offer, which breaks even at 350,000 subscribers around H2 2004, could be a winner with a number of non-satellite or cable viewers wanting more choice.
Overall then, Merrill Lynch believes that the DTA/Freeview Plus bid from ITV and Channel 4 has a slight advantage over the other three applicants, not least because the BBC is likely to be amalgamated into the DTA consortium later if its bid is successful.
The period of public consultation over the proposals ends on 21 June; the licences should be awarded by 4 July.