It's interesting that North West Television failed on quality grounds rather than for overbidding. Particularly with Phil Redmond, Yorkshire and Tyne Tees on board. They planned to quadruple the amount of local programming so perhaps the ITC felt it was a case of quantity over quality.
Well, that does indeed to appear to be the case, they were intending to use Mersey TV to provide hundreds of hours of programmes and the ITC said that it was unrealistic to expect a fairly small company (successful though they were, they only made a single programme) with their resources to produce the amount suggested. And of course YTV and Tyne Tees were almost ruled out for overbidding anyway, so resources will have been even more stretched.
I'm not even sure the Manchester bias at Granada is that much of a deal-breaker, you can say that quite a lot of regions were dominated by the city they were based in. Sheffield always used to complain YTV was all about Leeds (and the name of the company didn't help in parts of the region) and STV was always supposed to be obsessed with Glasgow. And there was always going to be an issue with the North West franchise because the same transmitter covers both cities so they can't do sub-opts.
Could the ITC have put in a ruling that the ITV Network centre, what effectively replaced the Big 5 in 1989, had to network something like 40% of programming commissioned by the other 10 smaller ITV companies? I'm not saying produced, but commissioned by them? I also admit that it may have been hard to implement.
And really, was there any need for such a system? TVS were interested in making more programmes for the network, but I doubt many of the smaller regions were especially bothered. For many of them it would have involved huge overheads and hiring more staff, for minimal reward. In one of the IBA Yearbooks from the eighties they talk about Ulster's drama output, they say how they didn't have the resources or studio space to have a full-time drama department, but they did have a drama consultant who worked part-time and was responsible for identifying scripts that could work for two or three single dramas a year they could make on location. That's about the size of the operation there. Meanwhile the ITV network were in the market for about a dozen dramas a week.
It's obvious why the Big Five dominated ITV's schedules, they had the facilities and the resources and they were based in the big cities where all the talent was. That's not a flaw in the system, that's how it was supposed to work. People generally weren't sitting in TSW and Border wishing they were making Saturday night programmes. They were happy enough making programmes for local consumption, while also benefitting from broadcasting the programmes from other regions.