Draft:1991 ITV franchise auctions: Difference between revisions

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Commercial television launched in the United Kingdom as a result of the Television Act 1954, and Independent Television began broadcasting in London in 1955. By the early 1970s, there were fifteen regional commercial broadcasting licences across the UK, each held by a different company.^[1] Each region was franchised to a single company, except London, where there were two: one from Monday mornings to Friday evenings, the weekday franchise; and another from Friday evenings to Sunday nights, the weekend franchise. The ITV companies jointly controlled ITN, which produced national and international news for the network.

The last franchise round, in 1980, had operated under virtually the same rules as all previous ones: bidders submitted a programming proposal to the Independent Broadcasting Authority, and the regulatory body chose the submission it regarded as the most promising.^[2] In that round, Westward Television and Southern Television had lost their franchises, to TSW and TVS respectively. ATV, the franchisee for the English midlands, was compelled by the regulator to reorganise itself into Central Independent Television, becoming essentially a new company with a stronger regional focus. In addition, the contract for a national breakfast service on ITV was awarded to TV-am, which began broadcasting in 1983.^[3]

The launch of Channel 4 in 1982 also involved the ITV companies. Although the new channel was administratively independent of the network, the ITV companies were responsible for selling its advertising space, thus preserving their monopoly over terrestrial TV ad revenue.^[4]

In the 1980s, it became clear that British television’s duopoly of the BBC and ITV was not going to last. Though ITV’s programming remained highly popular and critically acclaimed, the growth of independent production companies fostered by Channel 4 and the rise of cable and satellite television presented serious threats to ITV’s near-monopoly over commercial production and advertising.^[5] Relatively high trade union influence made ITV a bête noire of Prime Minister Margaret Thatcher and her free-market allies, including the advertising company Saatchi & Saatchi. In 1987, at a seminar on broadcasting at Downing Street, Thatcher described ITV as “the last bastion of restrictive practices”.^[6] Unsuccessful forays into multi-channel broadcasting with Super Channel and British Satellite Broadcasting in the late 1980s and early 1990s increased the financial pressure on the ITV companies.^[6]

In 1985, the Thatcher government formed the Peacock Committee to look into deregulating British broadcasting. Though many of the committee’s recommendations were not adopted, its work formed the basis for a White Paper, and in turn a Broadcasting Bill. Among other things, this proposed the launch of a fifth terrestrial TV channel, new quotas for independent production on both the BBC and ITV, and the replacement of the Independent Broadcasting Authority with a lighter-touch regulator, the Independent Television Commission. The government also proposed to allow Channel 4 to sell its own advertising for the first time.^[7]

Under the draft law, network scheduling plans would need to be submitted to the Office of Fair Trading, to foster competition and eliminate the major companies’ cartel-like control of prime time.^[8] In addition, the ITV companies themselves, as “Channel 3“, would replace the IBA as the legal broadcaster – a sign the balance of power was shifting away from the regulator. Unlike those of the IBA, the ITC’s decisions would be subject to judicial review.^[7]

The most controversial feature of the bill was the proposed reform of how ITV franchises would be awarded. Douglas Hurd described the procedure used in 1980 as “a system of despotism tempered by assassination”.^[9] Thatcher wanted to bring new companies with more competitive instincts into ITV to drive down costs across the industry.^[9] The government announced that the next franchise round would be decided by competitive tender – in effect, a blind auction. Franchises would be awarded to the company offering the highest annual stipend to the Treasury, with no other factors considered. The proposal was deeply unpopular.^[10] The Campaign for Quality Television, which included public figures like Judi Dench, Esther Rantzen and John Cleese, was formed to lobby against the government’s plan and demanded that franchises be awarded to the company willing to spend the most on programming.^[11] The producer and director Simon Albury told the Financial Times: “Money to the Treasury is the government’s over-riding concern; and viewers will be offered programmes of lower quality and narrower range.”^[12]

Though on its publication, David Mellor, the minister responsible, described the bill as “a great leap forward in the direction of wider choice in broadcasting”, the auction mechanism was watered down on its way through parliament. A quality threshold was introduced, as were tests relating to financial sustainability.^[13] After the bill was approved by MPs in 1990, The Stage reported that these changes had reduced interest in the franchises among major international players like NBC and Canal+, and that the likelihood of a major shake-up in ITV was now diminished, especially with the onset of the early 1990s recession.^[14]

The Broadcasting Act 1990 set out the rules which would govern the award of Channel 3 licences. Each licence would begin on 1 January 1993 and would last for ten years with the possibility of renewal for a further decade. The Independent Television Commission would be responsible for awarding the franchises in accordance with the new law. Rather than a simple blind auction, there was a two-stage process. For the first stage, without knowing the exact cash bid each applicant had made, the ITC would analyse their programme offerings and financial plans.

The quality threshold would only be met if an applicant had:

• Sufficient news and current affairs programming dealing with national and international matters;
• Sufficient high-quality programming in non-news areas;
• Sufficient regional programming, which should be made predominantly within the region;
• Sufficient children’s and religious programming;
• Programming with a wide range of appeal;
• Sufficient programming made in Europe;
• At least a quarter of its programming made by independent production companies.^[15]

These specific quality criteria did not apply to the national breakfast franchise, though the Commission was expected to consider quality in its deliberations there also. The financial threshold would only be met if the ITC believed the applicant would be able to maintain their proposed level of service over the full ten-year licence period.^[15]

Only after these two thresholds had been met would the Commission proceed to the second stage and open the applicants’ sealed envelopes containing their cash bids. The highest qualifying bid would be the winner – except in “exceptional circumstances”, defined by the Act as those where the “quality of the service proposed by such an applicant is exceptionally high” relative to the highest qualified bidder.^[16] The exceptional circumstances clause was complicated by the high likelihood of judicial review in such cases, so much so that it was unclear if the ITC could use the power without having its decision overturned by the courts.^[17]

After the new licences came into force in 1993, restrictions on mergers within Channel 3 would be gradually lifted. At first, there would be a one-year moratorium on takeovers.^[18] From 1994, large companies within the network would be able to buy out smaller ones subject to the approval of the ITC, and European owners would be able to enter the system.^[19] The Broadcasting Act permitted the government to further relax these restrictions in the future.^[20]

• 1 November 1990: the Broadcasting Act 1990 is signed into law.
• 15 February 1991: the ITC invites bids for the sixteen Channel 3 licences.
• 15 May 1991: deadline for the submission of sealed bids to the ITC.
• 16 October 1991: announcement of the winners of the Channel 3 licences.
• 1 January 1993: new licences come into effect.
• 1 January 1994: limited mergers of Channel 3 companies permitted.

As the cash values were secret and challengers were not obliged make their intentions public before the May deadline for submissions, the auction process was subject to intense speculation in the media.^[21] Incumbents who lost faced the possibility of closure and the certainty of significant job losses. Companies who bid too high and won were likely to be unprofitable in an increasingly competitive advertising market. Press commentary on the bidding process had the potential to influence the value of incumbents or potential challengers, many of whom were publicly traded companies.^[22] Some incumbents could be unopposed, but had no way of knowing for sure. The bidding process created enormous uncertainty within the existing ITV companies, who did not know if they would be on air after 1992 and how much money they would have for programmes if they were.^[23]

There was widespread speculation that large independent production companies would join bidding consortia to challenge the incumbents, and many outside bids were reported to involve high-profile personalities from the worlds of business and entertainment. The sheer complexity of the application process – the ITC’s Invitation to Apply ran to a hundred pages – seemed to favour the incumbents.^[24] Though press coverage tended to focus on the battle for the larger regions and the breakfast franchise, the ITC Chairman George Russell noted during the initial call in February 1991 that smaller incumbents were also vulnerable, as it would be relatively easy for a well-resourced outsider to match their programme offering.^[25]

On the 15 May deadline for applications, bids were hand-delivered to the ITC headquarters in London, amid much media interest.^[26] After the deadline, the ITC announced that there had been forty bidders.^[27]

TV-am had held the national breakfast franchise since it began in 1983. Its broadcasting hours were 06:00 to 09:25 every day. Following a disastrous first few months on air, the station had found its feet under the leadership of Greg Dyke, and later Bruce Gyngell. By the late 1990s, it was the most profitable TV station in the world in terms of turnover, driven by a commitment to informality and a mix of serious and trivial output.^[28] In 1987, members of the ACTT union had gone on strike over staffing levels. Gyngell kept the station on air with a reduced workforce and sacked the striking workers three months later.^[29] For this, among other things, he was regarded as Margaret Thatcher’s favourite TV executive and was a personal friend of the Prime Minister.^[30]

An Australian with extensive experience at the Nine Network, Gyngell had made representations to Thatcher over the Broadcasting Bill, but few of them were followed. Going into the franchise round, the conventional wisdom was that TV-am was unbeatable due to its ratings success and Thatcherite ethos. Following the introduction of the quality threshold, Gyngell banked on the idea that quality would win the day for TV-am. He hoped to expand the company after 1993, potentially by bidding for the fifth terrestrial TV licence. Gyngell was deeply hostile to the idea of corporate restructuring as a means to increase profits and facilitate a higher bid, and also believed that, given TV-am’s reputation for lightweight news coverage, it could harm their chances to be seen to be cutting costs further.^[31]

TV-am faced two rivals, both led by former employees. Greg Dyke, now back at LWT, put together the Sunrise Television consortium. He gained the support of the Walt Disney Company, providing children’s programming and a vital infusion of capital for a higher bid, as well as Scottish Television and Broadcast Communications, a subsidiary of the Guardian Media Group.^[32] Visnews, part-owned by Reuters, was drafted to provide news coverage, and Sunrise promised regional news opt-outs at breakfast for the first time.^[33][34] Mike Hollingsworth, who had left TV-am in a cloud of recrimination with Gyngell and amid press reports of his extra-marital relationship with Good Morning Britain presenter Anne Diamond, formed the Daybreak consortium.^[35] He drafted NBC Europe as an international partner, and ITN were brought in as supplier of news. The Daily Telegraph and its owner Conrad Black were also involved.^[36] There were mutual conflicts of interest, as Sunrise news supplier Visnews was part-owned by NBC and ITN was part-owned by LWT and Scottish Television.^[37]

Both challengers believed they would outbid TV-am comfortably.^[38] Until the day of the announcement Gyngell remained highly confident TV-am would be successful on quality.^[39]

Thames Television had held the London weekday franchise since 1968, when it was created from a merger of ABC and Rediffusion. Since 1983, its broadcast hours were 09:25 on Monday to 17:15 on Friday. The largest of the ITV companies, Thames produced some of the network’s most popular and critically acclaimed programmes, including The Bill, Minder, The Sweeney and Mr. Bean. Thames had faced internal conflict during the 1980s, and both of its shareholders, Thorn EMI and British Electric Traction, wanted to sell their stakes in the company.^[40] Carlton Communications had attempted to buy Thames in 1985, but the IBA blocked the sale. Carlton’s chairman Michael Green was regarded in government as one of the few supporters of the blind auction system, and it was widely expected that his company would bid for at least one franchise in 1991.^[41]

Richard Branson, the high-profile founder of the Virgin Group, was interested in making a bid. In order to give his consortium experience and connections in ITV, he joined forces with David Frost, who had been a founder of LWT and TV-am.^[42] The bid was led by John Gau, a former producer of Panorama. Charterhouse Bank provided funding.^[43] The Chrysalis Group also joined the bid, which came to be known as CPV-TV: Chrysalis, Paradine and Virgin. CPV-TV decided to bid for three franchises – London weekday, the South and South East of England, and the East of England – reckoning that the work of preparing a bid would be similar for all three, and intending to consolidate its offering if it won in multiple regions. CPV-TV was widely expected to be the highest bidder for the London weekday franchise, which was its priority.^[44]

Carlton also bid against Thames, with a consortium comprising The Daily Telegraph and the Italian RCS MediaGroup. Carlton proposed to act as a publisher-broadcaster. The consortium’s auction strategy was to promise more of the same while bidding higher than Thames, in an attempt to ensure that it could not be rejected on quality grounds or exceptional circumstances.^[45] It was widely understood that Thames had bid the lowest of the three London weekday applicants. In public, Thames made contingency plans for defeat, proposing to become an independent producer of programmes for ITV and others. In private, the company’s chief executive Richard Dunn was confident the exceptional circumstances clause would be invoked to prevent Thames losing its licence.^[46]

Granada Television had held the North West of England franchise since 1968, and before that had broadcast to the North West and Yorkshire since 1956. It was the oldest surviving ITV company. It produced a number of the network’s most popular and critically acclaimed programmes, including Coronation Street, Prime Suspect, World in Action and Brideshead Revisited. Granada was one of the most profitable ITV companies. It had been accused of having a bias towards its base in Manchester, but in the 1980s it opened a studio complex in the Albert Dock in Liverpool, at which it made regional news and This Morning.^[47]

Granada faced one challenger, North West Television. The bid was led by Phil Redmond, creator of Grange Hill and Brookside, whose outspoken nature generated significant media interest. As well as Redmond’s Mersey Television, North West Television was supported by Yorkshire Television, Tyne Tees Television – in retaliation for Granada bidding against them – and Trinity International Holdings, owners of the Liverpool Echo. The consortium was valued at more than one billion pounds. Redmond proposed to give seed funding to community groups to make programmes that would be broadcast at lunchtime and viewed North West Television as a pioneer for the multi-channel era. Granada were sharply critical of their proposals, describing them as “cheap” and suggesting they “would not look out of place on Czechoslovakian television”.^[48]

Granada’s chairman David Plowright was an accomplished producer who had argued for the maintenance of quality in ITV’s approach to programming. However, the Granada Group, a large consortium including bingo halls and motorway service stations, was in financial trouble.^[49] Knowing that North West Television would bid higher than them, Granada decided to bid modestly and hope that quality would see them through.^[50] The media suggested that Coronation Street, ITV’s longest-running drama, might be sold to the BBC or even Rupert Murdoch‘s Sky if Granada lost the franchise.^[51] North West Television proposed its own soap opera aimed at older viewers called Willow Mist.^[52] By August, Granada were telling the media that they knew North West Television would be failed on quality grounds, raising the ire of Redmond.^[53]

TVS had held the South and South East of England franchise since 1982. This was a dual franchise, and TVS had operations in Southampton and Maidstone. TVS produced The Ruth Rendell Mysteries and a large amount of children’s programming. This part of England, already affluent, had become very wealthy during the 1980s economic boom, making it attractive to advertisers. In addition, TVS had engaged in ambitious expansion efforts, becoming “TVS Entertainment” after it bought MTM Enterprises, the production company founded by Mary Tyler Moore, in 1988. However, the collapse of the US syndication market in the late 1980s meant that TVS were in dire financial straits by 1991, and the survival of the business was at stake in the franchise round.^[54]

CPV-TV and Carlton Communications put up bids against TVS, but both were focused on the London weekday franchise. The main challenger was Meridian Broadcasting, a consortium made of media company Mills & Allen International, independent producer SelecTV and Central Independent Television. The chairman of the bid was Lord Hollick. The consortium was supported by Bill Cotton, the former controller of BBC One, as well as Tracey Ullman and Michael Palin.^[55]

It became clear during the summer that TVS had bid very high. The Stage reported that a figure of £55 million had been rumoured, and staff unions expressed horror at the prospect. Including its ad revenue contributions to the Treasury, such a bid meant TVS would be paying over £200,000 a day to stay on air before a single programme was made. TVS argued that a planned restructuring would make the figure manageable.^[56] On the eve of the announcement, it was believed that TVS was likely to have its bid rejected on financial grounds, but that even if it won, the company would face serious difficulty staying in business.^[57]

LWT had held the London weekend franchise since 1968. Since 1983, its broadcasting hours had run from 17:15 on Fridays to 06:00 on Mondays. It produced a number of ITV’s most popular programmes, including Blind Date, Play Your Cards Right and London’s Burning. Following the 1980s economic boom in London, the company was rich, but regarded as overstaffed and inefficient. To compete with a new entrant in the franchise round, LWT engaged in wholesale restructuring, laying off workers and replacing equity with debt in an attempt to become, in the words of the station’s Director of Programmes Greg Dyke, “rough, tough, and determined to win”.^[58]

LWT faced only one opponent, and at first it was regarded as a serious one. London Independent Broadcasting involved Polygram, Mentorn Productions and Palace Productions. It was run by Tom Gutteridge, the head of Mentorn. The bidders struggled to find a network insider to support them, however, being rejected by Thames and Granada. The consortium was haphazardly run, had its unlocked office burgled weeks before it was due to submit its bid, and suffered computer mishaps the night before the deadline.^[59] The bid promised to be “producer-led, not star-led”.^[60] LWT concluded that London Independent Broadcasting would be rejected on quality grounds and bid low, its directors incentivised to do so by share options introduced in the corporate restructuring.^[61]

Yorkshire Television had held the Yorkshire and Lincolnshire franchise since 1968. Based in Leeds, it produced a number of the network’s most popular and critically acclaimed programmes, including Emmerdale, 3-2-1 and The Beiderbecke Trilogy, as well as Countdown for Channel 4. Though it was considered one of the “Big Five” major ITV companies, it had been overtaken in terms of networked ad revenue by TVS during the 1980s.^[62] By 1991, however, the company was confident of success in the franchise round, especially as it had just produced The Darling Buds of May, which had quickly become the most popular programme in Britain.^[63]

Yorkshire TV was challenged by two opponents. White Rose TV was a consortium made up of the Chrysalis Group and two local newspaper concerns: Joseph Woodhead Ltd., proprietor of the Huddersfield Daily Examiner; and the Barnsley Chronicle.^[64] It was chaired by Viscount Lewisham. The broadcaster Nick Ross and politician Austin Mitchell were involved with the bid. It promised more programming for the Lincolnshire part of the region and proposed to commission programmes like Emmerdale from Yorkshire TV if it won the franchise.^[65][66] Viking TV was a consortium including TVF Media and the Barr & Wallace Arnold Trust, a coach tour operator.^[64] Yorkshire TV was known to have bid high and was expected to win.^[57]

Anglia Television had held the East of England franchise since 1959. Nationally, it was best known for producing Survival and the British version of Sale of the Century. The Sunday Express described it as “formerly one of ITV’s sleepier regions”, but population growth in Essex and the affluence of areas around Cambridge and Milton Keynes made it an attractive target for new entrants.^[67]

CPV-TV bid here, in addition to London weekday and the South and South East of England regions, but they were a last-minute entrant. A more significant challenge was presented by Three East, a consortium made up of Emap, the Luxembourg broadcaster CLT and the Daily Telegraph. This bid was chaired by former Conservative cabinet minister Lord Prior and its controller of entertainment was John Lloyd. Three East proposed to have its headquarters in Cambridge instead of Norwich.^[68] Anglia planned to become an independent programme producer if it lost its franchise, but it bid relatively high, and was expected to survive.^[69][57]

Tyne Tees Television had held the North East of England franchise since 1959. Based in Newcastle upon Tyne, the station was best known for its adaptations of Catherine Cookson novels and for The Tube, which it produced for Channel 4. Tyne Tees had a long-standing relationship with Yorkshire Television, having briefly merged with them to form Trident Television in the 1970s. Tyne Tees was perceived as vulnerable because of a decline in its networked output in preceding years.^[70] In March 1991, Yorkshire Television bought a 20% stake in the company from Vaux Breweries, ensuring that Tyne Tees would not face a franchise challenge from its larger neighbour.^[71][72]

Instead, the rival bid came from North East Television, a consortium led by Granada Television, Border Television and Thomson Regional, owners of the Evening Chronicle. Melvyn Bragg and Brendan Foster were involved with the bid, which was endorsed by Durham City Council.^[73][74] It was widely believed that Tyne Tees had bid more than North East Television, but there were concerns that the incumbent’s offer might be considered too high by the ITC.^[75] Tyne Tees’ bid was premised on them merging with Yorkshire Television in 1994 to cut costs – but they did not know that North East Television had made a low offer, banking that Tyne Tees would be rejected on financial grounds.^[76]

HTV had held the Wales and West of England franchise since 1968. Due to the geographical challenges presented by the Bristol Channel, this was a dual franchise, with separate operations in Cardiff and Bristol.^[77] HTV was a significant player in children’s programming, operating HTV Junior Drama Workshops in both cities, which were said to be at risk if the franchise was lost.^[78] HTV also made Welsh-language programming for S4C.

It was challenged by three rivals. Channel 3 Wales/West (C3W) was backed by Flextech, United Artists, and the Irish public broadcaster RTÉ.^[79] It involved figures with experience at the launches of Channel 4 and S4C. Its director of programmes was David Cunliffe, the prominent producer and director, who promised more programming made in north Wales.^[80] Merlin Television was controlled by Associated Newspapers and the Chrysalis Group. The chair of the bid was Ivor Richard and the director of programmes was Teleri Bevan. It organised meetings across the region so viewers could have their say on how the company would be run.^[81] Channel 3 Wales and West (W3W) was backed by the South West of England franchisee, TSW.^[64] It was chaired by Lord Morris of Castle Morris, and the musician Peter Gabriel was a major shareholder.^[82][83]

Though the ITC were happy with HTV’s programme plans, there were concerns about their financial forecasts. They were alleged to have overestimated their revenue prospects and share of net advertising revenue.^[84] The journalist Ray Snoddy discovered from an HTV executive that the company had bid over £20 million, a surprisingly high figure.^[85]

TSW had held the South West of England franchise since 1982. It was ITV’s fourth-smallest station, made few programmes for the network, and lobbied hard for the preservation of ITV’s regional culture. Its chairman, Harry Turner, was an admirer of Thatcherism, and, following an encounter with the Prime Minister at the Carlton Club in 1990, decided that the company would need to become more efficient to survive the Broadcasting Act.^[86]

TSW faced strong opposition from Westcountry Television, a consortium backed by Associated Newspapers, Brittany Ferries and South West Water and chaired by Sir John Banham, the Director General of the CBI. Westcountry proposed a significant increase in news and feature programmes.^[87] It also planned to disallow unionisation among its workers.^[88] Another bidder, TeleWest, intended to base its operations in Exeter instead of Plymouth, and was led by an independent producer, Malory Maltby.^[89]

It quickly became clear that TSW and Westcountry would both pass the quality threshold, and whoever bid highest was likely to win. Turner’s team at TSW forecast that Westcountry could not afford to bid more than £14 million at 1993 prices – so Turner decided to bid higher than that, on the premise that TSW would engage in drastic cost-cutting from 1993. It was obvious long before the result was announced that TSW was the highest bidder. However, when the journalist Ray Snoddy reported that Westcountry’s bid was rumoured to be much lower than Turner had expected, suspicion grew that TSW might be rejected on financial grounds.^[90] Nevertheless, the night before the announcement was made, Snoddy predicted on the BBC’s Late Show that TSW would survive.^[57]

Ulster Television had held the Northern Ireland franchise since 1959. Though a small broadcaster with limited contributions to the national network, Ulster Television was praised for its regional news coverage in the context of the Troubles. It was widely regarded as the ITV company least likely to lose its franchise, partly due to the esteem in which it was held, and partly because Northern Ireland, with its complex internal politics and relatively small population, was not seen as an appealing target for outside investors.^[91]

Nevertheless, UTV faced two challengers. The most competitive was TVNI, backed by a number of prominent local businessmen and Thomson Regional Newspapers, owners of The Belfast Telegraph.^[92] The bid was chaired by the Duke of Abercorn, whose father had previously bid for the Northern Ireland franchise in the 1950s.^[93] There was also an offer from the Lagan Television consortium, led by businessman Barney Eastwood, best known as the manager of the boxer Barry McGuigan. This bid involved the musician Phil Coulter and the Unionist politician Robert McCartney.^[94] On the eve of the annoucement, it was believed that UTV had been outbid.^[57]

Grampian Television had held the North of Scotland franchise since 1961. Covering a large and sparsely populated area from headquarters in Aberdeen, it was expected to retain the franchise without difficulty. However, despite being one of the smallest and least profitable companies in the network, Grampian faced two challengers.^[95]

C3 Caledonia was backed by the musician Donnie Munro. North of Scotland TV was a consortium led by Anne Duguid, a former Grampian announcer. Both challengers proposed to operate as publisher broadcasters, commissioning independent production companies based predominantly outside the region, and planned to significantly expand programming in Scottish Gaelic.^[96] It was widely rumoured that Grampian had been outbid by both its rivals.^[97]

Channel Television had held the Channel Islands franchise since 1962. By far the smallest ITV company, it faced an unexpected challenge from the CI3 Group, backed by the actor John Nettles, who lived on Jersey.^[98] The consortium included a number of former Channel TV employees and promised to expand news and regional programming.^[99] Before the result was announced, it was believed that Channel TV had been outbid by CI3.^[57]

Central Independent Television had held the English Midlands franchise since 1982, when it was formed out of a reorganisation of ATV.

Scottish Television had held the Central Scotland franchise since 1957.

Border Television had held the Borders and Isle of Man franchise since 1961.

On 16 October at 10:00 BST, the results were faxed to each applicant and a press release was issued. ITV itself broke into normal programming to report the news, and the franchise announcement was the main news story of the day.

Of the forty bids, twelve failed the quality threshold. A further three had their business plan rejected, including two incumbents. Thus, there were twenty-five qualifying bids for sixteen licences. Four franchises changed hands:

The other twelve incumbents all won out. Only five of the thirteen contested franchises were won by the highest bidder. In a press conference after the announcement, George Russell of the ITC noted that while the Treasury would get more money from the ITV companies as a result of the auctions, it would not be much more.^[100] Speaking to ITN, he said that such an auction process was unlikely to happen again, as ITV would consolidate in the 1990s.^[101] Speaking to the BBC, he said: “From the viewers’ point of view, they’re likely to get good quality programmes for the next few years, although the next year will be very difficult.”^[100]

• Bids in bold were winners.

Franchise	Bids
National breakfast service	Sunrise: £34,600,000 Daybreak: £33,200,000 TV-am (inc.): £14,100,000
Borders and Isle of Man
Central Scotland
Channel Islands
East of England
London (weekday)
London (weekend)	London Independent Broadcasting: £35,400,000[Q] LWT (inc.): £7,590,000
English Midlands
North of Scotland	North of Scotland TV: £2,710,000[Q] C3 Caledonia: £1,130,000[Q] Grampian (inc.): £720,000
North East England	Tyne Tees (inc.): £15,100,000 North East Television: £5,010,000
North West England	North West Television: £35,000,000[Q] Granada (inc.): £9,000,000
Northern Ireland	TVNI: £3,100,000[F] Lagan Television: £2,710,000[Q] Ulster (inc.): £1,010,000
South and South East England
South West England
Wales and West of England	HTV (inc.): £20,500,000 Merlin: £19,400,000 Channel 3 Wales and West: £18,300,000[Q] C3W: £17,800,000
Yorkshire and Lincolnshire	Yorkshire (inc.): £37,700,000 Viking: £30,100,000[Q] White Rose: £17,400,000

Media outlets reported that there were likely to be a thousand job losses at Thames following their defeat, as they moved to independent production. Chief executive Richard Dunn said it was “rough justice”, continuing: “We bid the maximum amount of money that we felt the London weekday licence was worth to Thames Television.”^[102] A union spokesperson alleged that the Broadcasting Act had been introduced to hobble Thames as a result of its production of This Week‘s “Death on the Rock” documentary, which Margaret Thatcher disliked.^[103]

Bruce Gyngell described TV-am’s defeat as “a black day for British broadcasting”. He said: “The fourteen-million pound bid was a proper and sensible bid given the exigencies of the business. I do not believe that Sunrise will be a profitable company. I predict that Sunrise will be bankrupt in 1994.” Presenter Mike Morris said he was “gutted”.^[103] David Frost, a TV-am founder and a loser four times over in the 1991 franchise battle, said: “I remember that when I was at school, I was always told that the important thing is not the winning, but it’s the taking part. I didn’t believe it then and I don’t believe it now.”^[103]

Harry Turner of defeated TSW said it was an “extraordinary result” and hinted at legal action.^[104] TVS and the Richard Branson-led CPV-TV were also said to be considering judicial review.^[105] Phil Redmond of North West Television appeared on Newsnight that evening, saying he was “bewildered” by the result, and could not understand how Yorkshire TV and Tyne Tees could pass the quality threshold in their own region while his consortium, which included them, did not.^[106]

Among the incumbents, the big winners of the franchise round were Granada and LWT. At Granada, the Coronation Street cast celebrated with champagne, as did LWT’s Matthew Kelly and Jeremy Beadle.^[102][107] LWT’s Greg Dyke, also a winner with Sunrise Television, told Thames News: “The whole process was a game of poker. It bore no resemblance, I think, to business.”^[107] He told the BBC it was a “daft system”.^[103] There was also champagne at Carlton Television.^[102] Its chief executive, Nigel Walmsley, told ITN that the introduction of central scheduling from 1993 meant there was a good chance Thames’ most popular programmes would remain on ITV. “I don’t think we’re talking about a revolution,” he continued.^[104]

The evening after the announcement, a number of prominent broadcasting figures appeared on a Late Show special hosted by Kirsty Wark and Ray Snoddy. The auction mechanism was widely criticised, though Cento Veljanovski, involved in the C3W bid, said it made ITV companies more efficient and competitive, and the quality threshold fulfilled its intended purpose. Clive Leach of Yorkshire TV defended his company’s high bid. He said: “You either bid high to win, or you hope, and throw the dice, that the others won’t get through the quality barrier.” John Perriss of Zenith Media, an ad agency, said that he believed the ITV companies, “minnows” in a global context, were likely to be bought up by multinational companies when the moratorium on European buyouts was lifted in 1994 and that this would lead to dramatic cost-cutting and reductions in quality.^[108]

• Gyngell’s Thatcher letter
• Cuts

TVNI in Northern Ireland was the only non-incumbent to pass the quality threshold, make the highest bid and still lose. This led to allegations that Ulster Television had retained the franchise for political reasons.^[109]

Speaking in 1992, the ITC’s George Russell said the biggest surprise of the franchise applications was the size of the TSW bid.^[110] It emerged that Yorkshire TV and Tyne Tees had narrowly avoided losing their franchise on financial grounds.^[111] Tyne Tees bid £15 million despite having never made profits of more than £3.5 million a year. Stuart Prebble, who worked for Granada and had been involved in North East Television, said in 2003 that the bid “put Tyne Tees out of business”.^[112] The merger of Yorkshire TV and Tyne Tees in 1992, approved by the ITC in spite of the moratorium, led to a bitter power struggle over which side would bear the brunt of cost cutting, and the ITC had to intervene on Tyne Tees’ behalf. It later emerged that Yorkshire TV had been falsifying accounts to hide the parlous state of its finances.^[113]

Bruce Gyngell’s prediction that GMTV would be “bankrupt in 1994” did not come to pass, but the company seriously struggled in its first year on air. It faced unexpected competition from Channel 4’s The Big Breakfast, which was a ratings sensation following its launch in September 1992.^[114] Indeed, Channel 4 under Michael Grade pursued an aggressively commercial strategy after 1993 to take advantage of its increased financial freedom, buying in American prime-time series like ER and Friends to appeal to an upmarket mass audience.^[115] By 1994, as a result of a statutory funding formula, Channel 4 was subsidising ITV, rather than the other way around.^[116] The growth of Sky, buoyed by live top-flight football rights previously held by ITV, further damaged the network.^[117] The ITC cut the fees paid by ITV companies to the Treasury in 1998, accepting that the licences were now overvalued.^[118]

Despite media speculation, there were no foreign takeovers of ITV companies. This was due to the complex rules still governing ITV in the 1990s, a perception that British realist dramas and comedies had less export potential than American series, and a sense that British broadcasters were not multimedia players in the way Fininvest and Bertelsmann were.^[119] It was only after the deregulation of independent programme exports in 2003 that British television became highly successful in international markets. The X Factor, a talent show format made by the former Thames Television under its new owner, FremantleMedia, was one major success story.^[120]

Carlton bought Central in 1994, the first of the post-moratorium ITV mergers. Granada followed with a hostile takeover of LWT.^[121] Under Charles Allen, Granada pursued a strategy of deepening its commitment to programme-making in contrast to the publisher-broadcaster model of Carlton.^[122] Granada bought Yorkshire-Tyne Tees in 1997. By 2001, every ITV company except GMTV, Scottish Television, Grampian Television, UTV and Channel Television was owned by Carlton or Granada, and regional branding was being phased out in England and Wales. Following the financial pressures created by the collapse of ITV Digital in 2002, Carlton and Granada merged to form ITV plc in 2004.

In a documentary made to celebrate the fiftieth anniversary of ITV in 2005, broadcasting figures reflected on the franchise auctions. Greg Dyke said “the system, as it turned out, was ridiculous”. He continued: “It didn’t help ITV for Thames to lose its franchise.” Sir Paul Fox said the system was “barmy”, complaining that it “brought in a company like Carlton Television, who haven’t produced one single decent programme”. He continued: “Was the audience served in a better way [by the new franchises]? Not at all.”^[123]

• Andrew Davidson, Under the Hammer: The ITV Franchise Battle (1992), William Heinemann, ISBN 0-434-17888-8
• Raymond Fitzwalter, The Dream That Died: The Rise and Fall of ITV (2008), Troubadour Publishing, ISBN 978-1906221-836
• Don Anderson, 50 Years of UTV (2009), Gill & Macmillan, ISBN 978-07171-4454-9
• Jamie Medhurst, A History of ITV in Wales (2010), University of Wales Press, ISBN 978-0-7083-2213-0