ITV Digital was placed into the hands of administrators yesterday after talks to reduce the payments of a deal with the Football League collapsed.
However, although the closure of ITV Digital has long been expected, the absence of a digital terrestrial broadcaster is crucial to UK broadcasting because it limits the options available to consumers who are not passed by cable networks.
The closure of ITV Digital will, in the short term, allow its owners Carlton Communications and Granada to concentrate on ITV1, their ailing terrestrial TV channel that has been hit by the advertising recession and BBC One broadcasting increasing amounts of mass-market programming.
Bob Wootton, ISBA director of media and advertising affairs, said: "[The closure of ITV Digital] may release funds which could be reallocated to invest into further improvements in programming. This would be good news for advertisers who view ITV1 as a key marketing tool and continue to call for increased programming investment for ITV1 to compete with the BBC's licence-fee funded channels."
However, there are also concerns that the lack of a digital terrestrial broadcaster would give Sky too much power over advertising revenues.
Wootton said: "The closure of ITV Digital would represent a major setback for competition in the digital television arena with the emergence of a possible Sky monopoly on advertiser access to this key medium.
"A situation in which a single company could veto advertiser access to an entire swathe of media would be of great concern. If ITV Digital was to close, UK advertisers would welcome the intervention of a firm and steady hand from government to help avert the dangers of a digital TV monopoly."
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