Channel 5 losers look to future

Focus has switched to digital TV and new programme deals, writes Mathew Horsman

Is there life after Channel 5?

Disappointed losers in the battle for Britain's last terrestrial channel have begun to adjust to the news, vowing that their interest in British broadcasting is undimmed despite their failure to win the coveted licence.

Companies such as BSkyB and Granada, members of low bidder New Century Television, had long since given up on winning, and have focused instead on developing their existing media assets. For BSkyB, that includes preparations for the launch of digital satellite television - what Sky chief Sam Chisholm calls the real story.

"We have no regrets. It is our belief that we had the most realistic bid from a financial viewpoint," he says, adding, in a reference to the winners: "If Pearson and MAI think they can make money, then good luck to them."

Granada, similarly, has shaken off the loss with little trouble. "We have made the commitment to programme-making capacity, and intend to expand further," said Chris Hopson, spokesman for Granada, which also owns London Weekend.

"Our strategy remains exactly the same: finding new outlets for our programme supply." He added that Granada would hope to sell programming to Channel 5, once the service is up and running in early 1997.

In the UKTV camp, the mood is mixed. SelecTV, the independent producer and cable broadcaster, is itself up for sale, and it is believed that the Channel 5 decision might have come as a relief.

Certainly, advisers to SelecTV believe the company's inclusion in what was considered the front-running bid was neither "a plus nor a minus" in negotiations with would-be buyers."Channel 5 is an irrelevance," one adviser said, even before the award was announced last Friday.

But it is understood that executives at CanWest, leaders of the UKTV consortium, remained extremely angry about their failure to win the licence after having made the highest cash bid of pounds 36m. The UKTV consortium plans to publish a detailed rebuttal of the reasons given by the ITC for the rejection of the highest bid, just as Virgin TV has promised to do. Both rebuttals will be made public this week.

All the same, while both UKTV and Virgin TV - which failed the ITC's quality threshold for diversity and quality of programming - stressed publicly that they were still considering legal action over the controversial decision, some members of the losing bid groups suggested privately that a judicial review was unlikely."It is time we drew a line under this," said one senior industry executive whose consortium failed to pass the quality threshold.

UKTV's CanWest, one of Canada's largest broadcasters, is attempting to balance its anger over the ITC decision and its desire to expand in the UK. Insiders said the company did not want to antagonise the ITC unduly, as it harboured "significant designs on the UK broadcasting industry."

Members of the Virgin TV consortium spent yesterday talking to lawyers, and scheduled a second meeting next week. The fact that legal advisers did not immediately discount the possibility of judicial review was seen last night as underlining how seriously the group views what it calls "inconsistencies" in the ITC decision.

But Richard Branson's Virgin Group, the main backers of Virgin TV, admitted privately that they were already beginning to focus on other business opportunities, including cable and - down the road - digital terrestrial television.

The strength of the Virgin brand made it a "natural" for cable programming, said one media analyst.

Virgin's Channel 5 partner Associated Newspapers is also expected to redouble efforts to expand its own embryonic broadcasting operations, based largely on the money-losing Channel One on cable.

HTV, a partner in the Virgin TV consortium, also said yesterday it was committed to expanding its TV operations. Chris Rowlands, chief executive, said: "For us, Channel 5 was like a module: separate from our main businesses. If we had won, so much the better, but we had come to a determination that we would not win, and we are concentrating on our core strategy."

For HTV, that means building up domestic and international sales of its natural history and childrens' programmes, and seeking new alliances.

Most of the losers said they expected Channel 5 to make money for Pearson and MAI, its chief backers, and regretted they would not be there to benefit. But the fragmentation of the British broadcasting market, and the advent of digital, suggests there will be ample opportunities for companies with media aspirations.