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EDITIONS
Tuesday, 28 May, 2002, 12:59 GMT 13:59 UK
ITV Digital hits Carlton profits
ITV Digital logo
Carlton's investment in ITV Digital was a failure
The collapse of ITV Digital and a slump in advertising have pushed Carlton Communications into the red.

The TV company lost 179.4m in the first six months of the year.

I think the idea behind ITV Digital was a good one

Gerry Murphy, Carlton chief executive

The closure of its joint pay-TV venture, ITV Digital, cost Carlton 99m.

But despite the failed investment, the company is now working on a bid for the digital licences which are being re-advertised.

Joint bid

The chief executive, Gerry Murphy, said Carlton was talking to its ITV Digital partner, Granada, about an ITV position.

"And, as ITV, we are currently talking to all of the free-to-air broadcasters to see if we can pull together a coherent proposal for the use of the spectrum," he added.

But he said he did not know whether or not they would be able to come up with one bid.

ITV Digital collapsed when Carlton and Granada withdrew their support.

Ahead of its time

ITV Digital owes the Football League 178.5m in TV rights payments and many clubs have said they will collapse if they money is not paid.

The Football League is trying to recover the money from Carlton and Granada through the courts.
Gerry Murphy, chief executive of Carlton Communications
Gerry Murphy says ITV Digital was ahead of its time

Mr Murphy told reporters he recognised the difficulty clubs were facing but he said Carlton had to consider its own stakeholders.

"I think the idea behind ITV Digital was a good one," he said.

"I think pay television through the aerial in due course will be a good business for somebody.

"The idea was ahead of its time, it was fraught with problems some of which were, I guess, under management control, some were not."

No Granada merger

Carlton's shares have been rising recently on rumours that it might merge with rival broadcaster Granada.

Mr Murphy said the two companies were not holding talks about a merger.

But he said the government's draft communications bill would certainly lead to the consolidation of ITV companies.

"It will happen one day, whether its happens in terms of a simple merger with Granada, or whether there are other routes to it, remains to be seen," he said.

Advertising woe

Carlton Communications' more traditional broadcast operations made a small profit of 2.8m during the first six months of the year.

Revenue for advertising fell by 13%, but Mr Murphy said there were signs of recovery.

The group also admitted that ITV1 had been affected by intensified ratings competition from the BBC and growing multi-channel penetration.

It is now trying to grow its businesses outside ITV and says its cinema advertising business in the UK is performing well.

Shares rose at the start of trading on Tuesday, gaining 6p to 265p but by the middle of the day were showing a gain of 0.50p.


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