ITV Digital up for sale as soccer talks crash

ITV Digital was formally put up for sale following the failure of administrators to agree revised terms with the Football League this week.

The administrator, Deloitte & Touche, said it had not been possible to restructure the business to meet its costs. It will attempt to sell ITV Digital as a going concern, though if a partial or full sale is agreed the ITV Digital brand will still disappear altogether.

ITV Digital owes the League £178 million for the rights to broadcast football matches from the Nationwide League over the next two years. David Burns, the Football League chief executive, said it would pursue Carlton and Granada - ITV Digital's shareholders, - for full payment of the money that is owed.

Deloitte & Touche has had several enquiries from potential buyers and is due to release further details of the sale later this week. The plan to sell the business as a going concern means that ITV Digital's 1.2 million subscribers will be able to access the service for the foreseeable future.

However, media analysts are sceptical that ITV Digital can be sold to one buyer. BSkyB, which would be prevented from a total acquisition of ITV Digital by the regulators, has denied any interest in buying assets such as its database of customers. Other potential buyers, such as Centrica and the BBC, may be interested in some part of the company, though Centrica claimed two weeks ago that its interest had waned. A management buyout is another option.

Adam Smith, the head of knowledge management at Zenith Media, said: "I can't think of anybody who would want to buy ITV Digital. It uses duff technology and its costs are greater than its income. Sky is the only buyer that would make sense and it is prevented from buying ITV Digital.

If you want pay-TV you buy Sky. ITV Digital is probably worth more dead than alive."

Carlton and Granada said last week that they would not be putting more cash into ITV Digital, which has already cost them upwards of £800 million.

In a bid to cut operating costs ahead of a sale, Deloitte & Touche is reported to have laid off more than 100 head office staff from ITV Digital.

However, media agencies are predicting that Carlton and Granada's exit from ITV Digital will benefit their core ITV1 service. Smith said: "Our view is that we'd rather they spent the money on better programmes than on ITV Digital. I don't think there is a vast funding crisis at ITV1 but ITV Digital has cost a lot in management time as well as money and this will free minds to concentrate on the main job and focus on what ITV is good at - and that's not pay-TV. ITV Digital has been an iron lung to Carlton and Granada. They thought it would preserve their main channel but it has ended up having the opposite effect."

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