ITV Digital woes bring football crisis

ITV Digital: Sunk by a disastrous deal to show football

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.

'Weeks' away from collapse?

If the two sides fail to come to a new agreement, ITV Digital could collapse completely in "a matter weeks" an unnamed source told the Reuters news agency on Thursday.

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

Tessa Jowell
Culture Secretary

"No length of time has been set. But it's more likely to be weeks than months," the source is quoted as saying.

"The next two weeks will be the key. If the Football League deal were to happen, it would have to happen in two weeks."

Wages squeeze

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

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

Graham Kelly, former Football Association chief executive

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

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.

'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.

There should certainly be serious consideration about whether there should be any future deals with ITV after they have pulled the plug on this one

Gordon Taylor, Professional Footballers' Association

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."

Boycott call

The head of the player's union Gordon Taylor said football authorities should think about boycotting any future deals with ITV.

"This is a solidarity issue now, and it's affecting the whole of football - clubs, players and supporters," he said.

"The Football Association and the Premier League, as well as the Football League, have their own deals with ITV - and there must be pressure brought to bear from those bodies."

"There should certainly be serious consideration about whether there should be any future deals with ITV after they have pulled the plug on this one."

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.

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.