MD
mdta
ITV Digital could close down 'within weeks' if the Football League today refuses to accept a £128m cut in the amount it is owed by the troubled pay-TV company to broadcast its games.
The beleaguered business has told league executives it can afford to pay only £50m of the £178m it owes under the terms of a three year contract. If the league's board rejects the cut-price deal at a meeting today, ITV Digital could close within weeks and the clubs would lose out altogether, industry sources say.
The league, however, has warned that around one third of its 72 clubs could go bankrupt if the deal collapses. Many chairmen are expected to offer stiff resistance to the controversial offer.
Many analysts believe the value of sports rights has peaked and the chairmen realise that in an uncertain economy they are unlikely to attract any alternative offers from other broadcasters.
'This offer is non-negotiable,' said a senior source at one of ITV's biggest shareholders. 'It is a realistic reflection of what the rights are worth in this market and all the business can afford. The clubs have to ask themselves who else is going to support them if ITV Digital goes bust.'
Many chairmen, particularly those in the first division, want the channel to honour its contract.
Bradford City's chairman, Geoffrey Richmond, who is also a member of the Football League board, said: 'We have a binding contract with ITV Digital and we expect them to abide by it. The league will not be happy about accepting a renegotiated contract.
'We have all signed contracts that with the benefit of hindsight we should not have done but that does not mean that we can get out of them. Our position is quite clear. We have a contract that obligates ITV Digital to pay us £178m over the next two years and we expect them to honour that.'
The problem facing the 72 clubs is that there are not believed to be any guarantees from Carlton and Granada, the owners of ITV Digital. If the business were to close down, the clubs would have to launch a legal claim against a bankrupt organisation with few assets.
The two companies believe that renegotiating the contract is the only way ITV Digital can survive. They have already spent £800m on the business, which has 1.2 million subscribers but is way behind BSkyB in the race to sign up digital TV customers.
ITV Digital recently appointed Deloitte & Touche, the accountancy firm, to urgently and 'fundamentally' restructure all its deals with suppliers of content, including the £315m deal with the Football League.
ITV has been badly burned by gambles on football that have not paid off.
A bold move to wrest the Premiership highlights from the BBC and Match of the Day has been a financial failure and the show has been moved from prime time to a slot later in the evening.
The Football League contract has turned out to be massively overpriced. As few as 1,000 viewers have tuned in to watch some of the lower league games and the exclusive rights have failed to attract the number of subscribers ITV had hoped for.
Underlining the seriousness of the current predicament, it was Carlton's chief executive, Gerry Murphy, and Granada's chairman, Charles Allen, who with the ITV chief executive, Stuart Prebble, formed a high-powered delegation that made the £50m offer to the league last week.
Their presence was designed to emphasise to league executives that ITV Digital was serious when it said the contract had to be renegotiated.
Broadcasting rivals believe ITV is bluffing and trying to railroad the clubs into accepting a poorer deal.
City analysts expect the clubs to reject the £50m offer but steer away from all-out legal war. They believe the clubs will ask the league's executives to return to the negotiating table and try to extract a better deal, albeit vastly lower than the original contract.
The Guardian
(Edited by mdta at 6:16 pm on Mar. 21, 2002)
(Edited by mdta at 2:18 pm on Mar. 22, 2002)
(Edited by mdta at 1:52 pm on Mar. 23, 2002)
(Edited by mdta at 12:37 pm on Mar. 24, 2002)
(Edited by mdta at 7:42 pm on Mar. 25, 2002)
(Edited by mdta at 9:07 pm on Mar. 25, 2002)
The beleaguered business has told league executives it can afford to pay only £50m of the £178m it owes under the terms of a three year contract. If the league's board rejects the cut-price deal at a meeting today, ITV Digital could close within weeks and the clubs would lose out altogether, industry sources say.
The league, however, has warned that around one third of its 72 clubs could go bankrupt if the deal collapses. Many chairmen are expected to offer stiff resistance to the controversial offer.
Many analysts believe the value of sports rights has peaked and the chairmen realise that in an uncertain economy they are unlikely to attract any alternative offers from other broadcasters.
'This offer is non-negotiable,' said a senior source at one of ITV's biggest shareholders. 'It is a realistic reflection of what the rights are worth in this market and all the business can afford. The clubs have to ask themselves who else is going to support them if ITV Digital goes bust.'
Many chairmen, particularly those in the first division, want the channel to honour its contract.
Bradford City's chairman, Geoffrey Richmond, who is also a member of the Football League board, said: 'We have a binding contract with ITV Digital and we expect them to abide by it. The league will not be happy about accepting a renegotiated contract.
'We have all signed contracts that with the benefit of hindsight we should not have done but that does not mean that we can get out of them. Our position is quite clear. We have a contract that obligates ITV Digital to pay us £178m over the next two years and we expect them to honour that.'
The problem facing the 72 clubs is that there are not believed to be any guarantees from Carlton and Granada, the owners of ITV Digital. If the business were to close down, the clubs would have to launch a legal claim against a bankrupt organisation with few assets.
The two companies believe that renegotiating the contract is the only way ITV Digital can survive. They have already spent £800m on the business, which has 1.2 million subscribers but is way behind BSkyB in the race to sign up digital TV customers.
ITV Digital recently appointed Deloitte & Touche, the accountancy firm, to urgently and 'fundamentally' restructure all its deals with suppliers of content, including the £315m deal with the Football League.
ITV has been badly burned by gambles on football that have not paid off.
A bold move to wrest the Premiership highlights from the BBC and Match of the Day has been a financial failure and the show has been moved from prime time to a slot later in the evening.
The Football League contract has turned out to be massively overpriced. As few as 1,000 viewers have tuned in to watch some of the lower league games and the exclusive rights have failed to attract the number of subscribers ITV had hoped for.
Underlining the seriousness of the current predicament, it was Carlton's chief executive, Gerry Murphy, and Granada's chairman, Charles Allen, who with the ITV chief executive, Stuart Prebble, formed a high-powered delegation that made the £50m offer to the league last week.
Their presence was designed to emphasise to league executives that ITV Digital was serious when it said the contract had to be renegotiated.
Broadcasting rivals believe ITV is bluffing and trying to railroad the clubs into accepting a poorer deal.
City analysts expect the clubs to reject the £50m offer but steer away from all-out legal war. They believe the clubs will ask the league's executives to return to the negotiating table and try to extract a better deal, albeit vastly lower than the original contract.
The Guardian
(Edited by mdta at 6:16 pm on Mar. 21, 2002)
(Edited by mdta at 2:18 pm on Mar. 22, 2002)
(Edited by mdta at 1:52 pm on Mar. 23, 2002)
(Edited by mdta at 12:37 pm on Mar. 24, 2002)
(Edited by mdta at 7:42 pm on Mar. 25, 2002)
(Edited by mdta at 9:07 pm on Mar. 25, 2002)
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