Granada and Carlton count costs

GRANADA and Carlton are coming to the crunch over the fate of their costly ITV Digital pay-TV venture. The duo are hoping to find a way of reducing their investment without having to shut it down.

Attempts to find a partner have failed, so they are looking at ways of co-operating with rival satellite broadcaster BSkyB and cable firms NTL and Telewest. One option is to abandon investment in programmes and channels such as ITV Sport, but continue to provide a pay-TV digital service. ITV Digital could then offer rivals the chance to sell their own branded services through it, for a fee.

There is speculation that they will withdraw from the loss-making venture. Carlton boss Gerry Murphy has denied closure is imminent, but admits all options are being considered.

The firms have jointly spent £800m on ITV Digital and expect to invest a further £300m before break-even in 2003 or 2004. Analysts say they cannot afford to keep on spending unless there is a sudden improvement in ITV advertising revenues.

Broker Investec reckons the two could save £750m if they close the business. 'They can struggle on, but clearly this is not the investment they thought it would be,' said Kingsley Wilson at Investec.