[eccr] ITV Digital collapse brings football crisis

Title: ITV Digital collapse brings football crisis

Thursday, 28 March, 2002, 11:23 GMT

ITV Digital collapse brings football crisis

The Culture Secretary Tessa Jowell has said that now is the moment to sort out the unstable finances of the UK's football clubs. 

ITV Digital 
Set up in Nov 98 as OnDigital 
50:50 owned by Carlton and Granada 
Rebranded ITV Digital Apr 00 
1.3 million subscribers 
Thought to be losing about £1m a day 


Speaking to BBC Radio Four's Today programme, Ms Jowell said the government would not be handing out cash to either the collapsed ITV Digital or the struggling football clubs. 

ITV Digital was put into administration on Wednesday because it could no longer afford its multi-million pound contract with the Football League. 

Up to 30 football clubs say they could go out of business if the broadcaster fails to honour its £315m contract for Nationwide League and Worthington Cup matches. 

"The focus today has got to be on securing continued negotiations between the Football League and ITV digital during the administration period," Ms Jowell said. 

Wages squeeze 

League chairman Keith Harris threatened to sue ITV Digital's owners, Carlton and Granada, for £500m unless they agreed to pay-up. 

Now is the moment to look at the longer term restructuring of football finances 


Culture Secretary And former sports minister Tony Banks warned that league football was now facing the "greatest crisis" in its history. 

But the main reason for the squeeze on football clubs is the high cost of players' wages. 

"The finances of football clubs have been unstable for a long time...now is the moment to look at the longer term restructuring of football finances," Ms Jowell said. 

The threat was felt by many fans at England's game against Italy on Wednesday evening. 

One said: "I'm from Halifax and they're bottom of the league, and they're in a lot of trouble. 

"They don't get very much [money] anyway, so if they get even less from the deal it can only be bad news." 

'Moral obligation' 

One of the clubs struggling for survival is Bury, who are currently in administration and were hoping for £200,000 from the TV deal in September. 

Carlton and Granada should stand behind the contract that they signed... they have a moral obligation 

Graham Kelly, former Football Association chief executive Bury's joint chairman Fred Mason told the BBC that the government should step in to help clubs out. 

But Graham Kelly, the former chief executive of the Football Association, disagreed, and said it was the ITV firms who had a duty to pay up. 

"Carlton and Granada should stand behind the contract that they signed," he told the Today programme. 

"They said they would stand behind ITV Digital. They have a moral obligation." 

Low audiences 

Accountants called in to run ITV Digital are beginning the process of trying to get the company back on its feet. 

To turn ITV Digital into a viable business, administrators need to cut costs - and the £178m outstanding on its football contract is an obvious target. 

We are the digital television leader of the world 

Tessa Jowell Before it went into administration the broadcaster, hit by low audiences and falling advertising revenue, said it could only come up with £50m. 

The administrators hope they can persuade the 72 clubs waiting for the money to accept the offer. 

ITV Digital has already axed 600 staff but said no decision had yet been made about the remaining 1,800 employees. 

Monkey 

Granada and Carlton are providing enough cash to ensure subscribers continue to receive programmes through their set-top boxes. 

Digital TV subscribers 
BSkyB 5.7 million 
ITV Digital 1.26 million 
NTL 1.25 million 
Telewest 724,000 

The company had hoped to take on BSkyB for digital TV subscribers, but funding has been tight and low audience figures turned away potential advertisers. 

It has 1.26 million subscribers, but it loses one out of every four attracted through its marketing campaign fronted by stand-up comic Johnny Vegas and his Monkey companion. 

Granada and Carlton have already pumped £800m into the venture, seen as a flagship for digital television when launched as OnDigital in 1998. 

Digital future 

The government has insisted the decision to place ITV Digital into administration "is not the end of digital terrestrial television in the UK". 

Ms Jowell said that plans to switch off analogue television by the end of the decade were still realistic. 

"We are the digital television leader of the world," Ms Jowell stressed. 

But she also admitted that more alternatives were needed to Sky and cable television. 

And cable television has troubles of its own, with NTL - the UK's biggest cable company - admitting it too may run out of money. 

Source: http://news.bbc.co.uk/hi/english/business/newsid_1898000/1898021.stm