MPs are calling for changes to the limits on shareholdings in ITN
ITV could take full control of ITN if a coalition of Liberal Democrat and Conservative MPs succeeds in a challenge to the communications bill.
In a rare act of solidarity, Shadow Media Secretary John Whittingdale and LibDem broadcasting spokesman Nick Harvey called this week for changes to the limit on how much of the news provider’s shares can be owned by ITV.
Both argued independently that the ownership rules proposed in the bill did not go far enough and called for changes that would pave the way for ITV to take full control of ITN.
Under current rules, any one company can own only 20 per cent of ITN – a limit which would be increased to 40 per cent under the bill.
The Government’s opposition to ITV owning ITN is believed to be partly due to Granada and Carlton’s digital fiasco and its unhappiness with last year’s cut to ITN’s budget for ITV News to just over £30m.
The signing of the new contract, after a Sky News-led consortium had made a rival bid, was followed by around 90 voluntary redundancies and cutbacks.
Media Secretary Tessa Jowell is also thought to oppose ITV control of ITN because, under relaxed ownership rules, a foreign company could end up owning the news provider.
But during the debate on the bill in the Commons this week, MPs argued that ITV’s news would be better placed to compete with the BBC and Sky News if the cap was lifted.
"What ITN needs is investment to be able to compete with Sky News and the BBC," Whittingdale told Jowell before MPs voted a second reading to the communications bill.
"Retaining a cap on ownership effectively prevents ITN from growing as a business and providing a third force in news provision."
Agreeing, Harvey said: "I would go one stage further and make ITV take full responsibility for ITN to ensure that it is driven to be a serious competitor for BBC news and Sky news. I fear the current arrangements are beginning to undermine ITN and will continue to do so."
Insiders say the Tory-LibDem line-up is significant because both parties have rarely agreed on media-related issues, but together they could force changes to the bill, especially in the House of Lords.
A spokesman for ITN said the news provider had been "lobbying hard for the abolition of the ownership cap and this week’s debate was an excellent start".
The current 20 per cent ownership rule was imposed in the early Nineties as part of the Thatcher Government’s plan to uncouple ITV and its news provider and allow ITN to operate as an independent company. Before that, the individual ITV franchise holders were joint owners of ITN.
The bill’s proposed 40 per cent limit will be too restrictive in the new broadcasting environment and will not generate the required investment needed for ITN, the MPs claim.
A further clause that stipulates that Carlton and Granada cannot both own a 40 per cent stake has also been criticised by Whittingdale.
The other ITN shareholders – United Business Media, Reuters and Daily Mail & General Trust – are said to have signalled their willingness to sell their stakes next year.
But Whittingdale said the rules would "act as an obstacle to the merging of Carlton and Granada and will require the new company to divest part of its holding".
By David Rose and Julie Tomlin