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Channel 5 fever in the U.K.

The specter of the TV station that never was has returned to haunt the U.K. TV biz — and several major international players are lining up for a piece of the action. That’s true even though informed opinion is radically divided over the channel’s prospects.

“It’s a channel propelled by steam. It’s a non-starter,” says an industry veteran. Others, including Time Warner Inc., Pearson and U.K. media group MAI, disagree.

Time Warner, together with Pearson and MAI (owners of ITV stations Meridian and Anglia), have formed a consortium to bid for C5. They may face competition from other blue-chip media operators such as NBC, Luxembourg-based international broadcaster CLT, and BSkyB, all of which are believed to be thinking of pitching for the license.

There is, however, a problem to be overcome: The U.K. government has to decide whether it still wants to run with C5. The legislation that led to 1991’s blind-bid ITV franchise auction is now universally regarded by all of those involved as a disaster.

If Blighty is to come out on top in the impending digital revolution, it is vital that no more mistakes are made. With an eye on Britain’s trade balance and the precarious state of the U.K. electronics industry, the Department of Trade & Industry is taking a renewed interest in broadcasting.

Supporters of C5, including the Independent Television Commission, a regulatory org, fear the DTI is trying to kill the idea of the channel so that the frequencies it would need are reserved for the development of digital services. But the ITC thinks C5 could start within two years as a traditional terrestrial network without inhibiting the launch of digital TV.

There is an irony here. Eighteen months ago, when the ITC advertised C5, it refused to grant the franchise to the only bidder, Thames TV partnered by Toronto’s City TV, because of doubts about the pair’s business plan.

The cost of launching C5 was unusually steep since it involved re-tuning domestic video recorders because of interference with the C5 signal. Estimates said this would cost more than $ 100 million. Since then, work by Thames, Time Warner and the ITC’s own engineers appears to suggest the cost could be cut by as much as half.

Despite this obstacle, and although only about 75% of the U.K. would be able to receive the station, support for C5 is widespread. Indie producers want it, as do advertisers. Producer David Puttnam backs it. And those lobbying for it claim it could generate $ 750 million in work over five years for the U.K. production industry plus a valuable secondary market.

But skeptics remain unconvinced and say foreign investors don’t realize what they’re letting themselves in for. One claims that Time Warner doesn’t understand European media. “They haven’t got much idea about Europe,” he says. “Their European investments are a rag bag.”

Such is the head of steam now building up behind C5 that reports suggest that the Time Warner-Pearson-MAI consortium has offered the job of running the station to Greg Dyke, the charismatic London Weekend TV helmer who is quitting following Granada’s takeover of the London station.

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