ITN is facing a competitive challenge from Channel 3 News, a consortium led by BSkyB, which is offering to provide the service for £30m. In response ITN has shaved around £6m off its bid in an attempt to stay in the running.
ITN has also spent £300,000 over budget on its coverage of the terrorist attacks on the US.
The news of the loss will add weight to claims that the news provider used the money it was paid from the ITV contract to subsidise its attempt to break into new markets including cable channel EuroNews and London News Radio.
In 1998 ITN made a profit of £9.1m and in 1999 it made a profit of £7.7m. This year, its non-core contracts are set to lose £4.9m, offset by the £4.2m profit from its core contracts to supply news to ITV, Channel 4, Channel 5 and commercial radio.
ITN could learn as early as today whether its bid to keep the ITV contract has been successful. A panel of ITV executives from the ITV companies, including Ulster TV, Carlton and Granada, are meeting today to decide whether to enter into exclusive negotiations with ITN or Channel 3 News.
If the negotiations between ITV and whichever bidder is selected to go on to the next stage turn sour, the other bidder will be invited to enter into exclusive negotiations with ITV.
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