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.
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 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 |
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 |