4 - Gizza Franchise
An experienced Managing Director that pushed for its interests, strong advertising returns, and firm audience loyalty put TSW into an enviable position. Sir Brian Bailey, its chairman was also the chair of the ITV Association Council. It was also small enough to avoid threatening the big five who between them effectively ran the network. What could go wrong with its franchise application?
Harry Turner had received an indication of the problems that lay ahead when he arranged for a brief meeting with Margaret Thatcher at the Carlton Club. Turner barely had time to mention the subject, before the Prime Minister stopped him and said briskly, “I do hope that you are not afraid of competition, Mr. Turner”. After giving Harry Turner a brief, but fluent lecture on the merits of the free market, she walked away. It was obviously not going to be as simple as he had first thought.
TSW had been expecting to face a rival in its bid to retain the region’s licence. The company’s success and the relative simplicity of the area’s franchise made this almost certain. Some licences, such as Central’s and TVS’s were complicated by the need to provide split services for different localities. Being a small region serving less than two million people there was no requirement for a bidder in the south-west to do this The holder did not even have to provide programming for the network. In addition, the south-west’s audience was extraordinarily polarised, containing a far greater proportion of elderly people and virtually no sizeable ethnic groups. To gain the licence, a rival bidder would therefore have to concentrate on the regional programming side and bid more than the incumbent. Although prepared for a fight, TSW was stunned when it emerged that the company would be battling against two competitors - at least one of which was looking frighteningly well organised.
The less threatening bid was from a newly formed company called TeleWest. This was a small outfit headed by Malory Maltby, a local independent producer. The bid was given a more public face by the involvement of Angela Rippon, a national newsreader whose career had originated in the westcountry.
Despite the star appeal of the bid, it was always doubtful that this application would have the programming resources and expertise to remove TSW’s licence. Indeed, until their official entry was handed over, details concerning executive personnel were extremely vague, raising suspicions that most were still working for TSW. Despite bidding a surprisingly high £7.3 million, almost as much as Westcountry, their program proposals were, less surprisingly, deemed to have failed the quality threshold.
The other bidder was of much greater concern to TSW. Westcountry Television was headed by Stephen Redfarn, a merchant banker, and appeared to be a disturbingly more organised company. To begin with, Redfarn was no stranger to the television industry. As a friend of James Gatward, he had advised on TVS’s 1981 successful application, and arranged funds of fifty thousand pounds for the start-up of the company. Redfarn, who had quietly stalked TSW for months, had managed to put together a consortium of impressive skill and financial strength. He had the backing, not only of Associated Newspapers, which published the national Mail newspapers and had a strong regional presence, but also of South West Water, the area's cash-rich water and sewerage utility. Each of these companies took a twenty per cent share of the company. The third largest shareholder, Brittany Ferries took fifteen per cent of the stock.
Despite the overwhelming quality of Redfarn’s company, TSW felt comforted by the inherant bias towards the existing ITV companies in the Broadcasting Bill itself. No matter how much money a company put on the table, a mimimum level of programming had to be maintained throughout the life of the licence. These requirements of the new Broadcasting Bill handicapped greenfield bidders like Westcountry. If a company had held a licence, it would automatically have practical access to programming costs, for example - clearly something that an outsider would not have. In addition, each potential licensee had to provide a 10 year business plan complete with detailed growth projections. This obviously gave the incumbents a clear head-start.
It is interesting to note that Margaret Thatcher’s initial plan for the ITV auction included no mention of quality hurdles. Thatcher’s instincts were purely to hand the franchise to the highest bidder regardless of the quality of their application. Pressure groups such as the Campaign for Quality Television lobbied the Heritage Minister, David Mellor, very successfully to get an appraisal of standards built into the legislation. It has to be said that this quality threshold did not entirely hinder the incumbent companies applications. As the contractors had been running for at least ten years with little complaint, it seemed likely that a continuation of their existing services would be enough to get them through this hurdle. Of course, greenfield bidders did not have this luxury.
Westcountry’s response was to buy in some expertise in the form of Sir John Banham, the then director of the CBI, and Frank Copplestone. Copplestone had been Southern Television's managing director, at the time of its demise in the 1982 franchise round. Both of these experienced men now joined Westcountry’s application.
The fledgling company had obtained the financial and programming expertise that it required. It also promised technological breakthroughs that would enable the creation of a more regionalised service. Regional programming wisdom was to come from John Prescott-Thomas, the then head of Broadcasting at BBC South and West. Westcountry now had the strength to take on TSW, but did it have the local backing necessary to win? Westward had made a public tour by bus of the South West before they started broadcasting, and TSW just seemed to evolve from Westward. Westcountry were planning a major upheaval in regional style and yet their efforts to relate with the people that they were about to serve was were virtually none.
Meanwhile, Sir John Banham’s entry into Westcountry’s bid had not gone unnoticed by the staff at TSW. Harry Turner criticised Banham’s involvement as being against the best interests of one of the CBI’s members, adding that TSW was now actively considering pulling out of the association in protest.
Redfarn’s choice of financial backers also raised several questions. The most controversial backer was South West Water, the region’s water supplier. Residents of Camelford, in Cornwall, still clearly remembered the water company’s accidental attempt to poison the community in 1986. Over twenty tons of Aluminium Sulphate had been mistakenly dumped into the area's domestic water supply. South West Water had reacted with characteristic arrogance, but had ended up by paying out-of-court settlements to nearly a thousand of its customers. The utility had also been at the end of sustained opposition concerning its pricing policy. South West Water’s customers paid more than any other region for their water and sewerage, due to the region’s disproportionate length of coastline. Despite this, water quality often fell below that expected of it by its customers. Harry Turner captured the mood of the area when he suggested that the water company “should be concentrating on making their water better.” How, he argued, could editorial integrity be maintained in the light of any more adverse stories about the company?
Associated Newspapers also had questions raised about its suitability as a partner. The company already had substantial interests in the area, publishing special versions of its national papers alongside its considerable array of local titles. Although restricted to the twenty per cent cross-media holding allowed by the Broadcasting Bill, this still meant that Associated Newspapers would have a tighter grip on the area. Private Eye suggested that perhaps this was “one for the Monopolies Commission”. “Probably not” was its cynical and ultimately accurate reply.
Harry Turner had well-developed ideas about how to keep his licence. He realised that simply being the sitting tenant meant that TSW’s programming quality was already capable of passing the quality threshold. Its evening magazine programme, Today South West, was one of the most popular in the country. If its ratings were to be repeated nation-wide, it would be pulling in 9 million viewers, equivalent to the network’s successful Australian soap opera, Home and Away. Assuming enough effort was spent on making sure that the current standards of regional programming were to be maintained, the only thing that could make the ITC remove its licence was the financial bid.
Turner’s many contacts in the industry had made him certain that the whole franchise bidding system was purely a government tax raising exercise. The likelihood of the removal of licences from any awkward stations (such as Thames) was just an added extra. The financial bid worried him, as Westcountry had several big financial institutions on its side. He recognised that Westcountry would almost certainly bid to their maximum capacity. Turner’s team estimated this at around £12 million a year.
The final bids had to arrive, in person, at the ITC headquarters by Noon on 15 May 1991. Only eighteen hours earlier, TSW’s accountants, Ernst & Young, were paying host to a last minute discussion. The only item on the agenda was the one section of the franchise application that still had not been decided - the actual figure that TSW was to pay to retain its licence.
Turner had decided that it would be safest if the actual figure was determined as close to the final ITC deadline as possible. He had already been the target of fraud. A mystery man had convinced him that two senior TSW members were leaking details of its application to rival bidders. It was only after spending several thousand pounds and arranging four trips to Italy, that Turner realised that he was the victim of a con-man. As the debate wore on, the already large bid figures began to escalate.
To be relatively sure of winning, Turner knew he had to top Westcountry's highest probable bid of £12 million. This was already much more than TSW had ever made in a year. However, there was no other option. The board finally agreed to make a bid of £14 million, based on severe staffing cuts, and a positive advertising outlook. This looked too round a figure to many members of the board. Fortunately, the date was noticed - 14 May 1991. In figure form, this condensed to 14591. Thus, TSW’s bid figure was set - an index linked £14,591,000 was to be paid to the exchequer every year in order to keep the franchise. The figures had yet to be specified at 1993’s prices (the first year of the new term). This resulted in a spectacular value of £16.12 million pounds.
The next day, Turner arrived at the ITC’s offices in a black limousine. Always a show-stealer, he was seated beside TSW's mascot, Gus Honeybun, cigar in hand. If there was ever a time for reconsidering the size of the bid, it had now passed. The waiting began.