To be fair to Elstein, he may also have been worried about the damage to people's perception of digital TV as a whole that the ITV Digital collapse could bring about.
Remember also that later in 2002 there was the threat of customers having to pay for or return their boxes - and a lot of people may have decided they were satisifed with the five channels on analogue and just returned to that instead of getting a dish installed or installing cable.
Between them Carlton and Granada paid up £2.8m for the million or so set top boxes and promptly gave them to the people with whom they had resided.
On the outset it may look like a nice gesture to make for not very much money, but goodwill hasn’t played that big a part in the ITV Digital saga and it wasn’t about to start now.
Both Carlton and Granada had good reasons for stumping up the cash and both involve the former subscribers.
After the closure of ITV Digital, over a million people were suddenly left without pay-TV. It’s estimated that at least 300,000 of those moved over to satellite or cable, although there are no exact figures.
However that left at least half a million people who didn’t bother and just stuck with the free-to-air channels that remained. However, with the launch of Freeview, many people may have taken the opportunity to assess what they watch and decide whether it would be worth the outlay for a new DTT
adapter. Those that didn’t would have gone straight back to analogue.
In recent times ITV2 has made a bit of a mark for itself, building itself up to be the 6th biggest channel on DTT, behind the main five channels.
The potential decrease of tens, possibly hundreds of thousands of viewers could have dented its ratings and, more importantly, the amount of revenue it would have been able to raise by advertising and sponsorship.
Whether this risk was enough to warrant the spending of nearly £3m pounds, who knows? However, that was not the only concern.
Each ITV company pays a set amount to the Treasury each year for its license to broadcast. In recent years the government has offered the companies a reduction in these fees, depending on how many homes went digital. The so-called “digital dividend” saved Carlton and Granada £84m between them in the year to September 2002.
Any reduction in the number of digital homes would have seen the digital dividend decrease. At the time of its closure, ITV Digital accounted for around 14% of all digital homes, contributing around £11.8m to the digital dividend.
The reduction would have depended on how many homes gave up on digital. If around 250,000 households went back to analogue, it would cost the two companies £2.9m a year.
Obviously, no one knows how many people would have turned their backs on digital, but the chance to pay a few million (a small amount to both companies) to safeguard future rebates for a few years was obviously an attractive option.
And so Carlton and Granada can protect their balance sheets and former subscribers get to keep on watching digital television.