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Wednesday, 13 June, 2001, 16:49 GMT 17:49 UK
ITV to seek bids from news providers
ITN news reader Trevor McDonald
Trevor McDonald may lose his spot as the face of News at Ten
The commercial television network ITV is set to invite ITN and a consortium of companies to bid to become the channel's next news provider.

ITV plans to send out a tender document in the next week.

A consortium of five companies - including BSkyB and Bloomberg - is looking to wrest the ITV contract from the grip of the incumbent provider, ITN. It is up to ITV to set the duration of the contract, but the deal is thought to be worth 200m or more.

The winning bidder will be chosen in the autumn, according to an ITV spokeswoman.

The consortium is called Channel Three News includes BSkyB, Bloomberg, CBS, Chrysalis Group and Ulster TV, and each of the five have a 20% stake.

For the first time since 1955, ITN will face real competition for its prized contract, which accounts for about 45% of its revenues. Previous challenge

BSkyB has attempted to challenge ITN's dominance on ITV once before in 1996, but its lone bid was blocked because no shareholder in the news supplier to ITV can hold more than 20% of the company.

ITN's existing five-year contract with ITV is due to run out at the end of 2002, but renegotiation to appoint the next news provider will start within the month.

The ITV spokeswoman said that the tender document will include a deadline for bids, approximately six weeks from the day on which the tender is launched.

Further discussions will ensue for a month after the bidding deadline, before a final decision is reached in the autumn.

No more bidders

At this stage it is unlikely that any more bidders would emerge because they would first need to earn a nomination from the Independent Television Commission (ITC).

The ITC granted this status to Channel Three News in May after assessing that it had enough resources, was properly equipped and "adequately financed".

The ITV network maintains that the award of the contract will be made on an impartial basis, even though both Granada and Carlton own about 40% of ITN.

A vote on the competing bids would be taken by the ITV council, which includes representatives from Ulster TV - part of the Channel Three consortium - Border and SMG.

The ITV chairman Leslie Hill has the deciding vote.

Sceptical

Many observers are sceptical that Granada and Carlton would undermine the value of their stakes in ITN by giving away the contract to a competitor.

However, the smaller ITV companies may vote for a cheaper service provided by Channel Three News.

Richard Huntingdon, acting chairman of Channel Three News and chief executive of Chrysalis, has said in the past that the consortium "wouldn't be doing this if we didn't feel very confident that we would win".

ITN to lose out

Even if ITN does manage to hang onto its contract, it is likely that the competitive process would drive down the value of the deal - worth about 40m a year - by between 6 and 7m.

ITN's other shareholders are United Business Media, Daily Mail & General Trust and Reuters Group.

It has provided news for ITV since the network went on air in 1955.

Last year ITN launched a new 24-hour news channel, available through TV, radio, mobile phones and PCs.

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