25/03/2002

Is ITV Digital's £50m football offer an own goal?

ITV Digital's board was due to meet on Monday to discuss the possible risk of a £500 million legal action by the Football League if the digital broadcaster pulls the plug on televising Football League matches.

The future of ITV Digital looked less than bright when the Football League rejected the troubled broadcaster's downgraded £50 million for televising Nationwide League football games on Friday.

Similarly, the future of some of the leagues less financially viable clubs also hangs in the balance as many have incorporated ITV money into their budgets for the year. Any shortfall in revenues could lead to many clubs going into administration.

The Football League met to consider ITV Digital's offer in Connaught House on Thursday March 21, only for the board to emerge condemning ITV Digital's conduct as "reprehensible". The board pledged to "take this to court if we have to".

In the past week, both ITV Digital and the league clubs have offered robust statements of intent, and are seemingly in intractable positions.

It had been reported that ITV Digital could shut down "within weeks" should the Football League stand by their decision. It has also been reported that the broadcaster has had as few as 1,000 viewers for some games.

The posturing began last week when ITV Digital decided that it had to renegotiate its original three-year contract with the league, claiming that it cannot now afford the original £178 million price tag. This is despite £800 million being spent on the business and an extensive rebranding programme from the channel's previous incarnation as Ondigital.

Millwall chairman Theo Paphitis - whose club would be safe from a potential cash shortfall - angrily dismissed claims by ITV Digital's owners, Granada and Carlton, that the original contract could not now be honoured.

"It's ridiculous that Granada and Carlton, two massive City institutions, would destroy a national game because they want to save a few quid… by only offering £50 million they are merely saving their shareholders a bit of money while risking the future of Football League and English football," he said.

Mr Paphitis went on to issue an appeal to Granada and Carlton: "If you really want to save money, look at what you pay your chief executives and your chairman. They got you into this and made a legally binding agreement with us, but they seem to be spending more time collecting air miles than actually running a business properly."

ITV Digital declined to comment following Wednesday's meeting of the football board.

With around 1.2 million customers, ITV Digital recently appointed accountancy firm Deloitte & Touche to "fundamentally" restructure all its deals – including the £315 million deal for English league football rights.

Last year, Carlton Communications posted £118 million pre-tax profits for the year ending September 30 and Granada Media made a £201 million operating profit for the year.

ITV Digital, www.itv-digital.co.uk

(SP/GMcG)

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