Winner takes all 

19 October 2020 tbs.pm/71296

 

The Courier and Advertiser masthead

From The (Dundee) Courier for 27 June 1991

MEMBERS of the public had until yesterday to make comments to the Independent Television Commission (ITC) on the contenders bidding to take over the television licence for the north and north east of Scotland, currently held by Grampian TV.

Now, the three contenders – North of Scotland TV, Grampian and C3 Caledonia – must wait for the ITC to evaluate the quality aspect of their programme submissions then turn to their financial bids – before finding out, probably in October, which of them will serve ITV’s biggest region.

Here, a “Courier” writer looks at the background to the television shake-up, and the claims for the franchise made by each of the contenders.

When the Government’s White Paper on broadcasting revealed that competitive tendering for the 16 independent regional television companies would have to be made to a new authority called the Independent Television Commission, which was created out of the Independent Broadcasting Authority, few believed that Grampian Television’s 31-year monopoly of serving the north and north east of Scotland would be affected.

There were fears, perhaps, that a take-over bid by their bigger neighbour, Scottish Television, might be a possibility, but after Home Secretary Kenneth Baker announced earlier this year that a hostile bid wouldn’t be allowed, it seemed almost certain that Grampian would be unopposed when the bids for the new ITV franchises were lodged in May.

It was not to be.

 

ITC logo

 

Two challengers emerged – North of Scotland TV (NOS) and C3 Caledonia.

Both promised a more comprehensive and attractive service than Grampian who, not surprisingly, responded that anything their rivals can do, they can do better.

The new 10-year licences, which will come into effect at the start of 1993 when ITV will be renamed Channel 3, will be awarded by the ITC in the autumn.

But who will win the battle for the box in the north-east?

It is a difficult question.

The ITC is obliged by legislation to award licences to the highest bidder, in other words the incumbent or challenger who has bid the largest cash sum to run the franchise over the period of licence.

This bid sum, paid on an annual basis, inflation linked for the 10-year period, is destined for the Treasury, and will augment a levy on advertising revenue.

So all things being equal, the highest bid should win.

But along with financial models, which include estimates of advertising revenue, expenses of running each regional studio, regulatory and transmission costs, and potential returns on turnover (difficult to estimate given the problems of long-term financial projections), the rival companies had also to submit detailed programme plans – and this is where the ITC’s problems arise.

When the Broadcasting Bill became law it said that the commission may award a licence to the applicant “who has not submitted the highest bid, where it appears to the ITC that the quality of the proposed service is exceptionally high and is also substantially higher than that of the highest bidder.”

Thus, because the ITC will apply a quality threshold, or more accurately a quality “hurdle” that contenders must cross, before considering their cash bids, it is anybody’s guess which group will emerge with the franchise because “quality” will depend on the subjective judgment of the ITC.

Since the ITC is obliged by the 1990 Bill to place more weight on attracting quality programmes, they will inevitably plump for the service that offers more drama, more educational and more regional programmes than the service promoting soaps and movies.

 

Map of the UK with main transmitters highlighted

1986 map of the main transmitters of the ITV network

 

But who decides on the quality of these preferred programmes?

It hasn’t been defined so nobody will know – until the autumn.

Whatever happens, the real fun could begin after the franchises have been awarded.

Then, after a “cooling off” moratorium of 12 months from January, 1993, predators will be permitted to mount stock market take-overs of the Channel 3 television stations. Unsuccessful bidders in this year’s franchise stampede could attempt to buy this October’s successful bidders, and larger companies might prey on smaller neighbours.

In theory, the winner of the north-east franchise could even turn the tables and make an offer for Scottish Television in Glasgow!

Before then, however, the rival companies involved in the “Grampian” bid continue to try to convince local viewers that their service will be the best for the future of commercial television in the north and north east.

The three contenders are:

 


 

North of Scotland TV

 

Cameo of Anne Duguid

Chairman – Anne Duguid

With journalists expected to account for more than a quarter of its staff of 112, North of Scotland TV (NOS) has pledged a high news and current affairs output using the latest satellite technology. This department will be headed by John Brown, brother of Dunfermline East MP Gordon Brown, Labour’s trade and industry spokesman.

If its bid is successful, NOS will operate from a custom-built studio complex at Portlethen, near Aberdeen.

NOS has pledged nine hours a week of regional television, more, it claims, than its two rivals. It intends to have a studio in Dundee (as well as inverness and Stornoway) and has already promised a “fast-moving entertainment show from Perth.”

Among other priorities will be a minimum of 52 hours of Gaelic programmes each year and more coverage for sports such as hillwalking, angling and skiing.

The chairman of NOS is Anne Duguid, a former presenter with Grampian, and its bid includes support from the British Linen Bank.

 


 

Grampian Television

 

Cameo of Douglas Hardie

Chairman – Douglas Hardie

With a 30-year record of providing a popular mixture of network and local programmes, Grampian is confident of being allowed to continue it service.

Recently reporting a £25,000 [£57,320 today, allowing for inflation] rise in pre-tax profits to £2.43 million [£5.57m] for its year to February 28, 1991, the company appears to be in good shape.

Grampian claims its bid has the support of most independent producers in the north and north east.

It has pledged to retain its headquarters in Aberdeen as well as its studios in Dundee and Inverness, and to open a new outlet in Stornoway.

Recently, Grampian chairman Sir Douglas Hardie said, “I believe that Grampian’s application is head and shoulders above its competitors in terms of quality.”

The ITC may well be influenced by Grampian’s long history of serving the region.

 


 

C3 Caledonia Television

 

Cameo of Tommy MacPherson

Chairman – Tommy MacPherson

C3 Caledonia’s bid is backed by a diverse array of business and public figures, including chairman Tommy MacPherson from Kingussie, a former director of Brooke Bond, the National Coal Board, and TSB Scotland, as well as Donnie Munro of the rock group Runrig and former Grampian TV presenter Jack McLauchlin.

It also pledges full coverage of business and industry sectors and more programmes for older people.

A new headquarters in Aberdeen is envisaged.

A subsidiary company would be established in Inverness to make Gaelic programmes, and it is expected that a Dundee studio will be opened.

 


 

❛❛Russ J Graham writes: Scottish newspapers spent the time from the franchise applications going in and the ITC making its announcement of the winners on 16 October 1991 wildly speculating on the fate of Grampian.

The main reason for this was Scottish Television and Border being unopposed in their regions, making Grampian the only ITV story in town. Additionally, newspapers everywhere have always liked to give commercial television companies a kicking, especially when they’re down, as they are the number one rival of advertising sales. If the byproduct of being sure that NOS or C3C are going to win and that Grampian is doomed is uncertainty in the advertising market, that can only be to the profit of the newspapers.

For all that, this is a pretty balanced account from the Courier. It rightly notes the importance of the quality threshold in the ITC’s decision making, something that an amazing 9 of the bidders nationally forgot. That includes NOS and C3C. North of Scotland offered £2,710,000 a year to HM Treasury in its bid – about £6m in today’s money. Note that Grampian’s profit for 1990-1, pre-tax, was £2.43m. We can be pretty confident that, had NOS not failed at the first, quality, hurdle, they’d’ve been ruled out for having a bad business plan anyway.

C3C’s bid was a bit more sensible at £1,130,000 a year, about £2.5m now. That would probably have got them through the business plan element, but they too failed the quality threshold.

This left Grampian the winner by default, with a bid of £720,000 a year, about £1.5m now. This is still a lot – 30% of pre-tax profits – but much more manageable.

Incidentally, what a different world it would be, in Scotland, anyway, if Grampian had bought out STV, as the Courier jokingly suggests, rather than the other way around as happened.

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