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Ofcom suggests ITV, C5 licence auction

The UK’s media regulator has suggested the public service licences run by ITV and Channel 5 (C5) could be put up for auction when existing agreements expire in 2014.

Ofcom has published a report directed to culture secretary Jeremy Hunt in which it advises him whether the two broadcasters should retain the contracts for a further 10 years.

It said that while ITV (which operates the channel three licence with STV in Scotland and UTV in Northern Ireland) and C5 could continue to fulfill their public service remits, an auction is a “credible” alternative.

The third channel and C5 licences currently require broadcasters to meet several public service requirements, such as providing news and current affairs programming, in return for benefits like prominence on the electronic programming guide.

In the report, Ofcom said both ITV and C5 have “continued to play a key role in delivering public service programming and providing opportunities for the UK content production industry.”

It added that they had both “exceeded their respective production and programming obligations between 2007 and 2010,” the last year for which full data is available.

However, Hunt has been advised that auctioning the licences could “reinvigorate” the channel three model. Ofcom also suggested a stand-alone licence for the third channel could be established in Wales.

An auction would also determine whether a new bidder could offer a greater commitment to original programming than C5, which saw its spend between 2007 and 2010 decline by 49% from £122m (US$192m) to £62m.

Besides renewing the existing agreements or an auction, Ofcom also presented a third option, which would see the current contracts renewed for a shorter period while the new Communications Bill is passed through Parliament.

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