Allen searches for signal to buy Top Up TV

CHARLES Allen, chief executive of ITV, has not ruled out returning to the pay-TV market and could be interested in buying budget service Top Up TV, industry sources said.

His three channels are free-to-air and raise their revenue from advertising. But the main ITV1 channel has seen its audiences decline in the face of competition from multi-channel pay-TV operations such as satellite broadcaster Sky and its dependence on advertising revenue could be a weakness as subscription television grows.

ITV was involved with subscription television in the past when it launched ITV Digital as a rival to satellite and cable pay-television services, but this venture collapsed after losing £1.2bn in 2002.

Unlike ITV Digital, however, Top Up TV is not trying to compete for premium customers by offering expensively acquired sporting rights or films.

Instead, Top Up offers an additional service to Freeview audiences with compatible settop boxes for a flat fee of £7.99 a month rather than an annual subscription. 'ITV would be happy to look at the details of the business if its founders were looking to sell it,' said a source.

Top Up was founded a year ago by former Sky executives David Chance, who is on the ITV board, and Ian West.

It has a break-even target of 250,000 users and at present has an estimated 150,000 customers. There are five million Freeview households.

'Top Up is the gatekeeper to pay-TV on Freeview and there are few pure free-to-air commercial broadcasters left in the world that are not actively looking at developing a pay-TV service,' said another source.

Last week, ITV bought Freeview transmission firm SDN for £134m. Neither ITV nor Top Up TV would comment.

? BSkyB is to report an increase of 90,000 subscribers when it unveils its third-quarter results on Wednesday.

But investors fear that more than 10% of customers have quit the broadcaster in the three months to the end of March.

Profit for the nine months to March looks likely to be up 18% to £424m, with turnover rising about 9% to £2.9bn.