The Channel 3 News consortium tried to undercut ITN by a considerable margin, which resulted in ITN having to radically readjust its bid price to around £33m, down around £13m from its initial bid of £46m.
ITN had been charging over £40m a year to supply ITV1 with news, until Channel 3 News said it could do it for £30m a year. The challenger also accused ITN of using the ITV money to subsidise ventures in new markets it was trying to break into.
ITN will now go into exclusive negotiations with ITV. However, should these talks break down, Channel 3 News will be invited into exclusive talks with the broadcaster.
ITN's shareholders include ITV shareholders Carlton and Granada, alongside the Daily Mail & General Trust, United Business Media and Reuters.
ITV partners Carlton and Granada look set to shave up to £10m a year on the the new deal.
The decision will come as a blow to Rupert Murdoch, who has now attempted to wrest one of the terrestrial TV news contracts from ITN four times. His last attempt was in 1999 when he challenged ITN for the Channel 5 News contract.
Channel 3 News comprises BSkyB, Bloomberg, CBS, Ulster TV and Chrysalis.
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