The Stage

Ofcom slashes cost of ITV’s analogue licence by £135m

Published Tuesday 5 July 2005 at 12:40 by Jeremy Austin

Ofcom has cut by almost two-thirds the amount of money ITV pays for its licence to broadcast its analogue service, freeing up £135 million and immediately sending its share price soaring by more than 5%.

The announcement is good news for programme-makers dealing with the network. Welcoming the decision, its chief executive Charles Allen emphasised the commitment to pouring money into programming and said the organisation would be spending around £1 billion on high quality shows this year across its analogue and digital channels.

“These terms mean a very significant reduction in licence payments for ITV plc this year, with further steady reductions to come,” he said. “Across ITV1, ITV2, ITV3, ITV4 and the ITV News Channel, ITV will invest around £1 billion in programming this year. It is critical that ITV has the firepower to sustain this investment and take forward its digital strategy.”

City analysts had expected the reduction in the amount the group pays to broadcast to fall between £95 million and £115 million - well short of the actual £135 million reduction that takes its fee to £80 million a year. In 2004 it paid £215 million for its 12 licences, which include GMTV. This will continue to fall as the British broadcasting industry approaches the 2012 switch-off of analogue services. By then, ITV will be paying only £4 million.

Five has also seen a fall in its licence fee of £4 million, reducing it from £13 million last year to £9 million this year. Scottish Media Group has seen a reduction from £4.5 million last year to £1.5 million this. Ofcom chief executive Stephen Carter said commercial broadcasters had received all the help they could from the regulator to enable them to continue to meet public service broadcasting requirements. He added it was “now up to ITV to deliver”.

Following the announcement, ITV’s shares rose 6.5p to 122.5p, the biggest rise of any stock on the FTSE 100 index of leading British companies.