Was the merger a direct result of ITV Digital going under, or were they already eyeing each other up anyway?
Partly because of the ITV Digital disaster. The share prices of both ITV companies dropped sharply as a result of ITV Digital's struggling efforts. But by that time too they had also planned to remove regional identities from ITV1.
Due to not getting Sky carriage, wasn't it? The rest of the Carlton digital channels died off too.
CITV could and probably should have launched a lot earlier than it did.
Yep. But in fact, ITV has historically struggled with most of their pay services, whether they were operated by Carlton, Granada and even ITV itself. Carlton's problems have been well documented here - no Sky carriage in particular. Granada set up a pay TV venture with Sky and by the end it transmogrified into a division responsible for running ITV's digital channels. Their own
DTT platform crumbled under the spectre of Sky and overpaying for less lucrative football rights.
They still cannot shake off their struggle with their own pay TV efforts - ITV Box Office was seen as a joke by boxing fans and had widespread problems on Sky's platform in the past, and with ITV Encore being closed down next week, it's safe to say that it didn't gain much traction.