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ITV Sport is facing closure unless it can renegotiate the term of its £315 million broadcast contract with the Football League, it was revealed today, writes Dominic Timms.
The channel, which bought the rights to broadcast matches from the non-Premiership Nationwide League clubs last year, has conducted an internal review which has determined that it cannot afford to honour the three year contract under its existing terms.
Investment bank Credit Suisse First Boston estimates the channel needs 2.4 million subscribers to become cash-flow positive. ITV Sport currently has just 138,000 subscribers and would need to invest around £130 million for the next five years.
The channel has already paid £165 million to Nationwide football clubs, but ITV Sport shareholders Carlton and Granada are examining options to renegotiate the contract in addition to looking at distribution options for the channel.
A senior ITV Sport source, quoted in a report in today's Financial Times, said the channel 'will not see out the life of the current contract as it is currently negotiated.'
The Football League, which last week denied that it had been approached by ITV Sport with a view to renegotiating the deal, is thought to be determined not to allow a reduction in its real value.
However it may be left with little option if Carlton and Granada decide to let the channel fold. 'If the Football League won't renegotiate, the only way out of the contract would be for ITV Sport to go bankrupt.' Oliver & Ohlbaum media analyst Mark Oliver told the paper.
But any decision to pull out of the contract is likely to cost ITV Sport dear as the channel would almost certainly have to pay compensation to the Nationwide football clubs.
The channel, which bought the rights to broadcast matches from the non-Premiership Nationwide League clubs last year, has conducted an internal review which has determined that it cannot afford to honour the three year contract under its existing terms.
Investment bank Credit Suisse First Boston estimates the channel needs 2.4 million subscribers to become cash-flow positive. ITV Sport currently has just 138,000 subscribers and would need to invest around £130 million for the next five years.
The channel has already paid £165 million to Nationwide football clubs, but ITV Sport shareholders Carlton and Granada are examining options to renegotiate the contract in addition to looking at distribution options for the channel.
A senior ITV Sport source, quoted in a report in today's Financial Times, said the channel 'will not see out the life of the current contract as it is currently negotiated.'
The Football League, which last week denied that it had been approached by ITV Sport with a view to renegotiating the deal, is thought to be determined not to allow a reduction in its real value.
However it may be left with little option if Carlton and Granada decide to let the channel fold. 'If the Football League won't renegotiate, the only way out of the contract would be for ITV Sport to go bankrupt.' Oliver & Ohlbaum media analyst Mark Oliver told the paper.
But any decision to pull out of the contract is likely to cost ITV Sport dear as the channel would almost certainly have to pay compensation to the Nationwide football clubs.