Finance

Under Section 10 of the Television Act the Independent Television Authority is required to ensure that its revenue is at least sufficient (a) to meet all sums properly chargeable to revenue account, i.e. to meet all its running costs, to provide for depreciation, to pay interest on any loans made to it, to repay those loans, and to maintain a Reserve Fund; and (b) to finance capital expenditure.

Independent Television receives no income or financial support of any kind from public funds nor any part of the television licence fees. The Authority is dependent for its income on the rentals it secures from the programme contractors it appoints to supply programmes for broadcasting from its transmitting stations. To permit it to build the transmitting stations and to cover the initial running costs, the Television Act provided that the Authority could borrow up to £2 million. The terms agreed with the Treasury were that the Authority should pay interest at the rates current for public loans and should repay the whole of the advances by July 1964. The Authority borrowed only £555,000, which was fully repaid by July 1959.

In its first seven years and eight months the Authority has earned as income just over £20 million, mostly by rentals from the programme companies but including a relatively small amount of interest. About £8 million has been spent on running the service and providing for depreciation of fixed assets. Nearly £6 million has had to be paid to the Exchequer in income and profits tax. The balance of about £6.5 million was available to the Authority to do the other things required by the Act, i.e. to repay the loans made to it, to create and maintain its Reserve Fund, and to finance its capital expenditure.

Up to 31st March 1962 the Authority had spent nearly £4.9 million on fixed assets. Of this amount, nearly £1.6 million was provided by the depreciation which had accumulated on those assets. The rest, £3.3 million, had to come from the £6.5 million left after taxation. This left £3.2 million, of which £1.9 million has been put to Reserve Fund and invested in Government stocks and bonds, and nearly another £1 million has been paid over to the Exchequer in accordance with instructions of the Postmaster-General. The remainder, about £250,000, has been left with the Authority as a reserve to cover working expenses and the increased cost of replacing fixed assets.

Thus the Authority has since 1954 created a television transmitting network costing nearly £5 million at no charge to the public in the form of licence fees, excise duties, or taxation. In addition, it has contributed to the Exchequer nearly £6 million in taxation, and a further £1 million by direct payment. This is quite apart from the substantial sums paid to the Exchequer by the programme companies in respect of income tax, profits tax and the 11 per cent Television Advertisement Duty.

The following pages contain the ITA’s summarised revenue accounts covering the period from the passing of the Act on 29th July 1954 to the 31st March 1962, and Balance Sheets as at 31st March of each year since 1955.

Balance Sheet 31st March 1962
CAPITAL RESERVES
Capital expenditure 3,295,000
Increased cost of replacement of fixed assets 100,000
3,395,000
RESERVE FUND, created under Section 14 of the
Television Act, 1954 1,920,000
REVENUE RESERVE
Unappropriated net revenue 143,764
5,458,764
FUTURE TAXATION
Income tax, 1962-63 870,000
Taxation equalisation reserve 75,000
945,000
CONTRIBUTION TO THE EXCHEQUER
Amount payable under Section 13 (2) of the Television Act, 1954 531,311
CURRENT LIABILITIES AND PROVISIONS
Creditors and accrued liabilities 675,743
Current taxation 461,694 1,137,437
£8,072,512
Cost Accumulated Depreciation
FIXED ASSETS at cost
less depreciation
Buildings —freehold 808,881 38,099 770,782
—leasehold 274,401 119,002 155,399
Plant, equipment and motor vehicles 3,176,517 1,402,235 1,774,282
Furniture and fittings 105,775 18,081 87,694
4,365,574 1,577,417 2,788,157
Payments on account for plant and buildings under construction 505,255
3,293,412
RESERVE FUND INVESTMENTS (market value £1,990,449,
1961 – £1,480,551) 1,919,996
CURRENT ASSETS
Stock of spares at cost 140,365
Secured loans to staff for house purchase 318,745
Debtors and payments in advance 558,404
Loans to government authorities
Tax reserve certificates
Short term investments (market value, £1,863,447,
1961 – £276,191 1,806,635
Balance with bankers and cash in hand 34,995
2,859,104
NOTES:
1. At 31st March 1962, the unexpended part of the Authority’s programme of station construction amounted to approximately £3,400,000 of which commitment amounting to £650,000 had been entered into.
2. The Authority has entered into agreements with the G.P.O. for hire of vision links under which indemnities may become payable if the links are surrendered by the Authority. At 31st March 1962, the maximum amount payable would have been £1,125,000.
Revenue Account for the Year ended 31st March 1962
REVENUE EXPENDITURE
ENGINEERING
Lines Network 634,818
Power, lighting and heating 45,462
Plant hire and maintenance 94,306
Transport 17,402
Salaries and wages 385,569
Site testing and field strength investigations 39,079
Sundry expenses inc. travelling and removal 57,905
1,274,541
PREMISES
Rent, rates and taxes 201,812
Telephones 14,555
Insurance 11,104
Lighting, heating and cleaning 14,769
Maintenance and repairs 4,700
246,940
MANAGEMENT AND CENTRAL SERVICES
Fees to members of the Authority 13,425
Advisory committee fees and expenses 3,822
Salaries 146,444
Professional fees and expenses 31,057
Sundry expenses, inc. research, travelling and stationery 68,516
263,264
CONTRIBUTION TO STAFF PENSION SCHEME 33,983
DEPRECIATION
Buildings —freehold 13,834
—leasehold 23,753
Plant, equipment and motor vehicles 313,070
Furniture and fittings 7,107
357,764
UNITED KINGDOM TAXATION
Profits Tax 390,000
Income tax on the profits of the year (after crediting tax of £112,000 on investment allowances) 903,577
1,293,577
NET REVENUE carried forward 1,409,311
£4,879,380
Appropriation Account for the Year ended 31st March 1962
TRANSFERS TO RESERVES
Taxation equalisation 38,000
Capital expenditure 740,000
Reserve fund
Increased cost of replacement of fixed assets 100,000
878,000
CONTRIBUTION TO THE EXCHEQUER
Amount payable under Section 13 (2) of the Television Act 531,311
UNAPPROPRIATED NET REVENUE 143,764
£1,553,075
OPERATING INCOME £4,693,161
INTEREST RECEIVED AND RECEIVABLE 153,239
Profit on realisation of investments 20,985
Net surplus on disposal of fixes assets 11,995
£4,879,380
NET REVENUE brought forward 1,409,311
BALANCE brought forward from 1961 143,764
£1,553,075

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