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EDITIONS
Tuesday, 30 April, 2002, 17:11 GMT 18:11 UK
ITV Digital: Where did it all go wrong?
Rupert Murdoch
Rupert Murdoch: Having the last laugh

So it's over. ITV Digital, launched on the dream of challenging Rupert Murdoch's BSkyB, has pulled the plug.

Administrators Deloitte & Touche's terse statement that "unfortunately there is no appetite in the market for a preservation of the business" and to hand back ITV Digital's broadcast licence was met by the regulator's announcement to launch a fast-track process to find another digital broadcaster.

ITV Digital's giddying drop into the abyss was in sharp contrast to its launch party, when stunt men swung over the Thames and its backers' hopes spiralled high.

Oh what a party is was. The extravaganza which launched The Can.

Sorry, Mint. I mean, Set TV.


Sky is for sad people who live in lofts

Stephen Grabiner, former chief executive, ONdigital

Um, actually, ONdigital, as British Digital Broadcasting was eventually renamed, after spending 100,000 on brand consultants.

ONdigital chiefs were, that August 1998 day, able to celebrate the creation of a rival to Rupert Murdoch's BSkyB in the sweet knowledge that they had received Mr Murdoch's help in doing so.

BSkyB had, with Carlton and Granada, been one of British Digital Broadcasting's original backers, but was forced to pull out over competition concerns.

Sniping at Sky

So it was perhaps an overconfident Stephen Grabiner, ONdigital chief executive, who sniped that Sky only attracted viewers who spent their days "fiddling with an electronic programme guide".

"Sky is for sad people who live in lofts," Mr Grabiner taunted.

ONdigital, meanwhile, would be for discerning Britons who knew what they liked, and could find it through 30 channels, rather than 200.

But whereas the ONdigital stuntmen who bungee jumped off Battersea bridge that day juggled their launch figures correctly, the broadcaster itself came to realise that its business plans would build only a castle in the air.

And that it had underestimated Fortress Sky.

Vital statistics

For ONdigital's problem was not so much that it failed to attract viewers.

ITV Digital - timeline
1997, Jan: BSkyB, Carlton and Granada team form British Digital Broadcasting
1997, Jun: BSkyB told to quit project
1998, Aug: BDB renamed ONdigital
1998, Nov: ONdigital opens to viewers
1999, Jul: Stephen Grabiner quits
2001, Apr: ITV Digital name revealed
2001, Sep: Sum invested hits 788m
2002, Feb: ITV Digital shake-up revealed
2002, Mar: Administrators called in
2002, Apr: Pay-TV services switched off

The broadcaster was launched with a target of winning 2 million viewers by 2003, and, on a cumulative measure, was probably on target to achieve that.

But one trouble was that so many subscribers left.

Almost one-in-four of the broadcaster's viewers had quit in three months, Carlton and Granada admitted in February.

And this turnaround only added to the cost of winning subscribers which, largely because of BSkyB, was far higher than the firm had bargained for.

Broadcast battle

The critics who thought BSkyB would end up cooked in its own satellite dishes saw the broadcaster unveil its own digital package. First.

So the ONdigital service was launched into a hostile environment, which became only harsher as a struggle for viewers commenced.

Both broadcasters dropped to zero their charges for set-top boxes and, where needed, dishes required to view programmes.

Both waived 20 connection charges.

And while both companies suffered, at least BSkyB had a history of profits, and an existing customer base, to lean on.

Hollow boast

It also offered, for an extra 2, far greater programme choice.

ONdigital was to find that the digital TV market was more related to the niche-ridden magazine market than the four-button world of traditional UK television.

The broadcaster claimed, and continued to boast, that it was the first company to launch a digital terrestrial TV service.

But the only viewers who could readily understand this concept were the kind of anorak customers who, according to Mr Grabiner, preferred Sky.

Defection

It was in fact through Mr Grabiner that the writing first appeared on the screen for ONdigital, when in July 1999 he left to join a Murdoch-backed internet venture.

(This was the same Mr Grabiner who a year earlier had said: "I believe deeply in what we are doing. My own career substantially depends on this... I am the lead architect.")

At the time of his defection, observers were still unsure whether Mr Grabiner was following the dictum "if you can't beat 'em, join 'em", or whether BSkyB was using the kind of tactic British Airways appeared to use when hiring EasyJet's main legal adviser.

The "if you can't beat 'em (or at least are worried you can't) hire 'em" approach.

Last ditch effort

Last year it became truly apparent which version was right, when Carlton and Granada, which have poured more than 800m into ONdigital, were forced to play their trump card.

(From left) Gabby Yorath, Mary Nightingale Tracy Shaw at launch of ITV Digital
ITV Digital's launch: Soon fell flat

They harnessed the ITV brand, "the most powerful in British commercial television", to ONdigital in an effort to drag the broadcaster - as ITV Digital - into profitability.

And, taking a leaf from BSkyB's schedule, ITV Digital bought heavily into football and in August launched ITV Sport.

Yet it was the wrong kind of football. Lower division muddy-kneed stuff, rather than the silk-shorted Premiership fare promoted by Sky.

ITV Digital found it was again delivering a limited version of a BSkyB service.

And when the 11 September attacks undermined an already wobbly advertising market, it seemed that Fortune as well as Carlton and Granada shareholders had ditched ITV Digital.

Lessons from hindsight?

Was there ever a niche for ONdigital? Were the right managers hired?

Would the service have been better off called The Can, Set TV, or Mint?

As for the name, while we will never discover if Mint would have made a fortune, we do know that the marketing consultancy which advised on ONdigital had earlier backed BA's doomed drive to redesign its tailfins.


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05 Oct 01 | Business
27 Feb 02 | Business
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