UK commercial broadcaster ITV plc says it welcomes the publication this morning of the financial terms set by media regulator Ofcom with respect to each of its regional Channel 3 licences and GMTV. Under the new terms for ITV plc’s 12 licences (including GMTV), it is estimated that payments for 2005 will be less than Ã‚£80 million, a fall of Ã‚£135 million compared to total 2004 payments of Ã‚£215 million.
The new terms also provide for further significant reductions in payments beyond 2005. Licence payments are comprised of a fixed cash sum and variable payments based on analogue advertising revenues. Under the new terms, the annual cash sum for ITV plc’s licences (including GMTV) will fall from more than Ã‚£70 million in 2004 to Ã‚£4 million from 2005. Around 95% of 2005 payments will be comprised of variable payments, which will reduce progressively with digital take up. At digital switchover, variable payments will fall to zero and total ITV plc licence payments will be Ã‚£4 million (in 2005 terms).
Commenting on the new financial terms, ITV plc Chief Executive Charles Allen said: “These terms mean a very significant reduction in licence payments for ITV plc this year, with further steady reductions to come. Across ITV1, ITV2, ITV3, ITV4 and the ITV News Channel, ITV will invest around Ã‚£1 billion in high quality programming this year. It is critical that ITV has the firepower to sustain this investment and take forward its digital strategy. The last six months have seen the successful completion of the Ofcom Public Service Broadcasting review and now the review of financial terms. But the modernisation of ITV regulation is not complete, with a number of important issues still to be addressed. From BBC Charter renewal, Ofcom’s review of the advertising market, the review of the European Television Without Frontiers Directive, the future regulation of new media platforms and the development of a new funding model for commercial PSB, ITV plc looks forward to working with Ofcom and Government on the important regulatory challenges which remain as we enter the digital age.”