franchise auction


franchise auction
   The idea of auctioning ITV franchises to the highest bidder was first mooted by the Peacock Committee in the mid-1980s. Previous to this, the Independent Broadcasting Authority (IBA) had taken account of an applicant’s financial standing, managerial proposal and programme policy in the award of a franchise. The idea of allocating the franchises by auction, very much part of the Thatcherite philosophy of the 1980s, caused uproar both within and outside of the industry. Much of the criticism was levelled by the Campaign for Quality Television, which argued that the calibre of television would be harmed and that the Independent Television Commission (ITC), a reformatted IBA, should have more discretion in the awarding of franchises. The ensuing debate led to a modified auction process being introduced by the Broadcasting Act of 1990.
   The Act required applicants initially to meet a quality hurdle before the highest bid rule would come into effect. The ITC was also granted an additional power that, in exceptional circumstances, meant they could award a franchise to a lower bid. The ITC’s interpretation of the quality threshold took into account the quality of programmes proposed, the diversity of programmes to be offered and the degree of regional commitment. The diversity of programmes was to be judged against the amount of programmes to be offered in nine categories: drama, entertainment, sport, news, factual, educational, religious, arts and children’s programming.
   Guidelines for the auction were published in February 1991 and the awards were made in October 1991, with the new franchises coming into effect on 1 January 1993. Of the thirty-four applicants, fourteen failed to pass the quality threshold and the franchises were then allocated to those with the highest bids. The controversial ‘exceptional circumstances clause’ was never used. Four new broadcasters joined the ITV system: Carlton, Meridian, GM-TV and Westcountry replacing, respectively, Thames TV, TVS, TVam and TSW. While some winning bids were extremely low (Central, for example, being unopposed, offered an annual payment of £2,000), others made large bids to secure a franchise (for example, Carlton’s bid of £43m per year to displace Thames). Many of the franchise holders are now seeking a change in this arrangement, arguing that, apart from the discrepancy of the amounts paid by different franchise holders, money is draining out of the ITV system and so out of programming.
   Further reading
    O’Malley, T. (1994) Closedown? The BBC and Government Broadcasting Policy 1979-92, London: Pluto Press (critical overview of government policy at this time).
   PAUL RIXON

Encyclopedia of contemporary British culture . . 2014.

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