Six months after it was supposed to be on air, Dublin's proposed new youth-oriented station shows little sign of materialising.

Last year's decision by the Independent Radio and Television Commission (IRTC) to award the licence to Spin FM is still hotly contested by the defeated bidders, one of whom is bringing the issue to the Supreme Court this autumn. The new station cannot start broadcasting until this litigation has been sorted out.

The highly-prized and potentially lucrative licence to broadcast to the capital's 18-to-35s was the subject of an intense battle between four groups comprising some of Ireland's leading names in broadcasting and entertainment. The outcome has been marked by rancour, accusations of unfair play and expensive recourse to lawyers.

Like moths to a flame, many leading entertainment figures were drawn to apply for the right to broadcast to Dublin's youth. Advertisers everywhere love these low-cost, high-reach outfits - in Scotland, a similar dance music station was sold recently for more than £30 million (€38 million), after only 11 months on air.

So Spin, as the winner, got a licence to print money; meanwhile, the three losing consortiums were left with six-figure bills and an anger that is undiminished almost a year after the decision was first announced.

The chairman of the Spin FM consortium is Mr Ossie Kilkenny, the former accountant of U2. The group's manager, Mr Paul McGuinness, and guitarist, The Edge, were involved respectively in the losing Pulse FM and Storm FM consortiums.

Mr McGuinness is particularly embittered by the verdict in favour of his former business partner in U2. He and Mr Kilkenny had already fallen out over previous dealings, but the radio licence row has certainly sealed the split. "If Storm had won, I'd have been happy to congratulate them. If we'd won, they would have wished us the best. But the result we got makes no sense at all," says Mr McGuinness.

The controversy has brought further unwelcome attention for the IRTC, whose decision to award the first national commercial radio licence to Century Radio in 1989 is currently under close scrutiny by the Flood tribunal. Twelve former members of the commission and a number of staff members are due to give evidence before the tribunal shortly.

The main, though not the only, reason for the present controversy stems from the 25 per cent shareholding of the businessman, Mr Denis O'Brien, in the Spin consortium. At least two of the unsuccessful bidders believe Mr O'Brien's involvement contravenes IRTC regulations, a claim that is denied by the IRTC. Long before he became a multi-millionaire through his involvement with Esat Telecom, Mr O'Brien scored the first real success of his business career when 98 FM won one of the Dublin radio licences in 1989. Mr O'Brien was chairman of that new venture and still retains a major interest in the station.

But companies owned by Mr O'Brien also own 22 per cent of East Coast Radio and 15 per cent of Newstalk, which was awarded the all-talk news licence. He has further broadcasting interests in Ireland and abroad.

At the oral hearings for the youth licence last October, Spin told the IRTC that Mr O'Brien/ 98 FM's involvement in the new station would be "passive" and that "Spin would be totally separate and independent of 98FM".

Yet Mr O'Brien is the only shareholder in Spin with radio experience. And, as one IRTC member, Mr Colum Kenny, noted in a newspaper article, "passivity is not the most obvious characteristic of Denis O'Brien's business style".

The other owners are Mr Kilkenny; the London-based dance company, Ministry of Sound; and Mr Michael Sherry, a haulier and food businessman. Mr Sherry lives on Wellington Road in Dublin, several doors away from the former Fianna Fail press secretary Mr P.J. Mara, whose son John co-ordinated the Spin bid.

Repeated attempts by The Irish Times to elicit from the IRTC its policy on cross-ownership proved unsuccessful, until a spokeswoman issued a letter stating that the commission "considers each application on its particular merits/demerits". The criteria regarding ownership are derived from Section 6 of the Radio and Television Act, 1988. This requires the IRTC to have regard to a number of issues when awarding licences, including the desirability of allowing any person to have control of, or substantial interests in, "an undue number" of broadcasters.

The IRTC declined to make available minutes of board meetings where the issue was discussed.

In practice, the IRTC operated a policy under which a person who owned one radio station was not allowed to take more than a 27 per cent stake in another station. The matter was considered by IRTC members at meetings in January 1999 and again in May, at which it was decided to retain the existing policy.

Mr O'Brien's involvement with Spin, therefore, would appear to infringe this rule. In correspondence with the defeated bidders, the IRTC has maintained, however, that its policy is "evolving" and has "never been set in stone". It allows for greater cross-ownership - as in the case of Mr O'Brien's holdings - "where it is deemed to be in the best interests of the radio industry". After Spin was awarded the licence, the three unsuccessful parties wrote to the commission seeking the rationale for its decision and the criteria used. The IRTC, through its solicitors, refused to provide this information.

Mr McGuinness then sought a judicial review of the decision in the High Court, claiming the IRTC had relaxed its normal criteria on cross-ownership. The Storm FM group, led by Mr Reynolds, also sought a judicial review.

In April, Pulse withdrew after the High Court told it to lodge £100,000 as security for costs. Even a wealthy businessman such as Mr McGuinness balked at the cost, with further legal expenses likely to top £500,000.

He comments: "I'm amazed that that the IRTC is prepared to spend any amount of money - taxpayers' money - to defend its secret decisions. It has shown no reluctance whatever to conceal its inner workings".

Storm, however, persevered and based its case for the licence award to be quashed on a claim that one member of the IRTC, Mr Colum Kenny, was objectively biased against Storm's application. It was alleged that Mr Kenny had prejudged Storm's application in relation to drugs at Dublin nightclubs, in particular The POD, which is operated by Mr Reynolds.

In May, the High Court found there was no basis for rescinding the IRTC's decision and rejected the allegation of bias. Storm's appeal against this decision is likely to be heard in the Supreme Court shortly.