End of £140m ITV giveaway

You can’t air hit shows for free, it warns rivals

ITV is demanding more than £140m a year for use of its main channel by pay TV rivals.

The commercial broadcaster wants Virgin Media and Sky to pay up for ITV1, which is home to prime-time hits such as Coronation Street, Victoria, The X Factor and Ant & Dec’s Saturday Night Takeaway.

Cable-and-satellite broadcasters have been able to carry the channel cost-free for years thanks to laws designed to help the cable-and-satellite TV markets when they were in their infancy.

But in a victory for ITV over the summer, legislation means it can demand cash from operators such as Virgin Media – with an implicit threat it could pull its channels if no agreement is reached.

Now these operators are preparing for a major showdown, with a similar bill possible for Sky as it provides more TV through the internet instead of satellite dishes in future.

This week analysts at Liberum put the amount that ITV could extract from the companies at more than £140m. The fees increase will be a top issue in Carolyn McCall’s in-tray when she takes over as ITV chief executive in January, with the broadcaster seeking to reduce its reliance on falling advertising revenues.

McCall, however, is expected to face a difficult battle, with Virgin Media insisting there is ‘no reason’ it should pay. The negotiations are further complicated because Virgin’s owner, Liberty Global, is ITV’s second biggest shareholder.

But an ITV spokesman said: ‘ITV should be paid fairly by pay TV platforms that make money from our multi-billion pound investment in original UK content, so we can continue to invest in the programmes that our viewers enjoy.’

Under the laws, Virgin and Sky have also been able to transmit the main channels of the BBC, Channel 4 and Channel 5 because they are considered public service broadcasters. While the other broadcasters have supported its lobbying in the past, ITV has been the most vocal in its calls for change.

Subscription TV providers already pay ITV for its other channels, such as ITV2. They also argue they already compensate the public broadcasters such as ITV and the BBC by giving them top-billing on set-top box TV guides, as well as highlyprized channels such as ‘103’ and ‘ 101’ respectively. Ministers, despite changing the law which allowed ITV to make its demands, have said they would not favour broadcasters levying extra costs on TV providers for their main channels.

Tom Mockridge, chief executive of Virgin Media, said earlier this year: ‘The Government has been clear, new fees should not be paid for mainstream channels. ITV is already fully compensated through its prominent position, audience reach and additional advertising revenue this delivers. It is carried for zero fee by all UK platforms and there is no reason why this shouldn’t continue to be the case at Virgin Media.’

A Government spokesman said yesterday: ‘Having carefully considered the wide range of views which have been expressed on this matter, the Government believes it is for the market to determine what fees, if any, are applicable.’