Canadian consortium in shock 36m C5 bid

A consortium led by Canadian-based broadcaster CanWest has startled industry observers by bidding a massive 36.3m for the Channel 5 licence. It was the highest bidder of four consortia which lodged bids by the midday deadline yesterday (Tuesday).

The two closest bidders were consortia led by Virgin and Pearson/MAI which each offered 22m. A fourth group involving BSkyB and Granada offered

only 2m.

The licence will be awarded to the highest bidder, as long as it satisfies the Independent Television Commission VCR retuning strategy – to avoid transmission interference – programming, and business-plan requirements.

But it is by not a foregone conclusion that the CanWest group has won. Last night, observers questioned the viability of its bid – which would require annual payments of 36.3m to the ITC throughout the ten-year licence.

James Walker, associate director at The Henley Centre, expresses surprise at the size of the bid. “It’s incredible, given that the maximum revenue they can expect is about 200m a year and annual programming costs alone will be about 150m.”

BSkyB’s bid was also a surprise for being so much lower, although Kleinwort Benson manager Katherine Pelly describes it as “sensible given that some ITV companies that bid high-level have had a problem”.