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27/02/2003

ITC announce terms for renewal of five licence

The ITC have set out the financial terms that will be offered to five if the broadcaster chooses to apply to renew their analogue television licence for the 10-year period beginning 1 April 2003.
This follows five's September 2002 decision to make a formal expression of interest to the ITC to seek renewal of their licence at the earliest opportunity.
The terms under which five currently operate required them to pay £24.6m (adjusted) upfront, but did not take account of revenue generated. The new terms acknowledge the likely decline in analogue viewers as digital television grows by reducing the cash price to £4.4m, and also sets an 8 point 'Percentage of Qualifying Revenue' (PQR) to be paid annually.
Based on the ITC's projections, approximately 75% of the total tender payments, over the 10-year licence period, will be derived from the Percentage of Qualifying Revenue (PQR) and approximately 25% from the cash bid.
The ITC believe that as the majority of the tender payments will now be derived from a percentage of the advertising revenue earned by the licensee, the basis of payments is more responsive to changes in market conditions. If revenues fall below expectations then the tender payments will also fall.
Sir Robin Biggam, Chairman of the ITC, said: "In setting the financial terms the ITC has looked to ensure that 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."
The broadcaster must inform the ITC whether they intend to accept or reject these terms by March 14 2003. As set out in the Broadcasting Act, the terms are not a matter of negotiation.
(GB)
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