Clash of the UK news titans.

Two major TV news suppliers, Visnews and Independent Television News (ITN), which have traditionally served two different markets, are increasingly becoming direct competitors.

The tacit rivalry between the two UK-based organizations has been based on reputation. Visnews is one of the world's leading broadcast news agencies that supplies specifically international news material from 35 overseas bureaus to more than 400 broadcaster clients. ITN has been, for 25 years, a pioneer broadcaster of national and international news. Its programs are watched daily by more than 20 million British viewers on the commercially funded Channel 3 and Channel 4 networks. It also has access to news material from more than 70 countries through its financial stake in World Television News (which is normally considered Visnews' direct competitor).

But, apparently, Visnews and ITN are setting their eyes on each other's territory. Plans to restructure shareholdings within the two groups are forcing them to take that route.

NBC, which owned 37.75 per cent of Visnews and supplied it with U.S. news, has sold its shares to the majority shareholder, Reuters. Reuters now owns 89 per cent of the agency and is negotiating to buy the remaining 11 per cent held by the BBC.

Reuters, which already operates 118 international news bureaus and services 650 broadcasters, has the resources and the cash to help Visnews consolidate its position in the costly business of gathering international news. The deal enables Visnews to open its first Brussels bureau and to expand its Moscow and Washington, D.C. offices. The resulting management shake-up has meant the transfer of Visnews managing director Julian Kerr to the same position at Reuters' Australian and New Zealand division; Visnews will now be incorporated into Reuters' media activities.

But the signs are that Visnews plans to strengthen its position in the UK territory. It has already doubled its UK operations after beating ITN to the contract for Good Morning Television, the new Channel 3 broadcast service which begins transmission next year, said general manager Barry McDonald. The BBC and Sky News, Rupert Murdoch's satellite service, are already clients.

By supplying national and international bulletins to Granada Television, the regional Independent Television (ITV) station, Visnews recently dented ITN's status as the sole news supplier to the ITV network. And other ITV contractors, including Central Television and Scottish Television, are thinking of adding Visnews to their ITN news programs. So where does that leave ITN?

As a broadcast service, ITN is currently financed by the 15 regional independent commercial broadcasters, which together form the Channel 3 ITV network. But the 1990 Broadcasting Act obliges the ITV shareholders to sell 51 per cent of their holdings next year, and thus convert ITN from a costcenter into a profit-making contracted news supplier. Potential buyers are the Big 3 U.S. networks and Ted Turner's Cable News Network. Although the very same legislation initially protects ITN by forcing ITV to use its services until 1995, when its performance will be reviewed, commercial pressures are already apparent.

Spokesman Glyn Matthias denied any direct rivalry with Visnews and insisted ITN was not in competition to supply agency services of any kind. That may be true, yet scrutiny of its current activities indicate that it is feeling the pressure from Visnews. ITN recently retained its contract to continue supplying Channel 4 with its daily news service until December 1994, but Visnews had also pitched for the same deal. By taking a 20 per cent share in the Daybreak consortium that applied for the new ITV breakfast TV franchise, ITN had hoped to become the news supplier. But Daybreak failed in its bid. The winner, Good Morning TV, as explained earlier, has given the news contract to Visnews.

The heat is also intensifying in other areas. The ITV shareholders want to reduce their annual payment to ITN by pound20 million. The inevitable cost-cutting measures have led to bitter labor disputes over the recent 137 staff redundancies.

The resulting management shake-up has not helped morale. And some of the new ITV franchise winners are unhappy about the obligation to use ITN.

Chief executive Bob Phillis is aiming for profitability next year. He plans to build ITN into a tough domestic and international fighter motivated by quality and profit. No doubt, he will chase after the contract for Channel 5, the new UK terrestrial service starting after 1994. His strategy includes concentrating on core programming activities. He has therefore sold subsidiary BASYS Automation Systems, the newsroom computer systems supplier, to Digital Equipment Corporation. ITN is also capitalizing on its broadcasting skills by launching Corporation Television Networks, a Business Television service, in a joint venture with PR giant Burson Marsteller.