[eccr] ITV Digital 'braced for collapse'

Title: ITV Digital 'braced for collapse'

Friday, 22 March, 2002, 16:45 GMT

ITV Digital 'braced for collapse'

ITV Digital faces collapse unless the Football League agree to renegotiate its £315m contract with the ailing service, reports have said. 

An unnamed source told the Reuters news agency that ITV Digital chiefs were "prepared for the worst". 

If the lower divisions die then the Premiership dies as well 

And the service's ITV Sports channel could go off the air within seven weeks unless football bosses agree to new terms, a separate report said. 

"There is now a very, very real threat of ITV Sport closing at the end of the football season," an ITV Digital executive told the PA news agency. 

"We feel we have made a fair and realistic offer to the Football League which would be in the interests of all parties for them to accept." 

But while ITV Digital has declined to comment on the speculation, a source told BBC News Online that no decision would be made on the service's future until an ongoing restructuring had been finalised. 

"The football league contract is just part of that, if the part that gets all the headlines," the source said. 

Implications for top clubs 

League chiefs on Thursday rejected pleas from ITV Digital to waive some of the £180m outstanding on the contract, which permits the service to screen matches from England's first second and third divisions.


Many of the 72 clubs in the divisions would themselves face collapse without the cash, the league said. 

While the collapse of the contract would have few immediate implications for Premiership clubs, they could suffer knock-on effects, Arsenal manager Arsene Wenger said. 

"The Premiership clubs are the elite and the lower divisions are the base that football is built on and you need both," Mr Wenger said. 

"If one dies then the other one dies as well." 

Bad publicity 

Football League chairman Keith Harris has written to ITV Digital's backers, media giants Carlton and Granada, calling on them to honour the three-year contract. 

But ITV Digital has said that Carlton and Granada are not liable for the payments, although some observers have warned the firm's stand to suffer negative publicity if cash starved clubs go to the wall. 

Shares in Granada closed 1.5p lower at 146.75p, while Carlton stock ended up 11p at 286p. 

Shares in BSkyB, the rival digital broadcaster, which would stand to gain from an ITV Digital collapse, closed 7.5p firmer at 795.5p. 

Battle for viewers 

ITV Digital snapped up the TV rights in an effort to win market share from BSkyB, which claims 5.7 million viewers in the UK and Ireland. 

But audiences have been disappointing, meaning ITV Digital could not reap the advertising revenues hoped for. 

Even high-profile advertising, featuring Manchester United star Ryan Giggs, failed to inspire viewers. 

ITV Digital has so far swallowed £800m of investment, and requires a further £300m to reach breakeven point. 

The service has shed one quarter of staff in the past year in an effort to cut down on costs. 

Some club chiefs had urged the Football League to consider a compromise deal, rather than risk forcing the end of ITV Digital and hopes of receiving any cash from the contract. 

Source: http://news.bbc.co.uk/hi/english/business/newsid_1886000/1886866.stm