Virgin TV promises court drama

MATHEW HORSMAN

Media Editor

Virgin TV promises fireworks at the High Court next month, when the controversial Channel 5 licence award is to be put to judicial review.

According to a Virgin TV insider, "you will be very surprised by what you learn" at the three-day hearing, scheduled to begin on 17 January.

Virgin TV declined to comment officially on its case. But speculation centres on correspondence between the Independent Television Commission and Channel 5 Broadcasting, which could show whether the ITC allowed the winning bidder to raise by pounds 100m the amount it had set aside to cover the costs of launching the channel.

Virgin TV, whose application was rejected on the grounds of quality, won the right to seek judicial review last month, claiming there had been procedural unfairness. The High Court ruled that the consortium had an arguable case.

Specifically, Virgin TV, made up of Richard Branson's Virgin Group and Paramount Television, said that Channel 5 Broadcasting had been given an opportunity to alter its bid after the 2 May deadline. Other bidders, Virgin TV claimed, were not provided an opportunity to make changes.

Channel 5 Broadcasting, backed by Pearson, MAI, CLT, the Luxembourg-based broadcaster, and Warburg Pincus, has said it merely clarified the amount set aside to cover the worst-case scenario of pounds 300m.

To date, most industry observers have assumed that Virgin TV would fail in its bid to overturn the award. The ITC has never lost a judicial review.

However, any suggestion of procedural unfairness could lead to a reconsideration of the licence award. Of the possible scenarios in the event of a court judgment in Virgin TV's favour, a re-bid is believed to be most likely.

Four bidders applied for the licence last Spring. UKTV, backed by Canadian broadcaster CanWest and SelecTV, the independent television producer, bid pounds 36m, the highest, but was disqualified on quality grounds. Its attempt earlier this month to win the right to judicial review failed, although it was given leave to submit information during the Virgin TV court case next month.

Virgin TV and Channel 5 Broadcasting controversially bid an identical pounds 22,002,000, while low-bidder New Century, backed by Rupert Murdoch's BSkyB, Granada and others, offered pounds 2m. New Century's petition for judicial review, filed two weeks ago, was also rejected.