TV cash crisis blamed on greed

David Bond, Deputy Political Editor @djbond6873|Sports News Correspondent

13 April 2012

The Football League today accused the owners of ITV Digital of plunging English football into its biggest ever cash crisis purely for corporate greed.

In an increasingly bitter dispute, League chairman Keith Harris said parent companies Carlton and Granada had reneged on the £315 million football deal because it was "inconvenient to their corporate ambitions".

The two companies called off their merger earlier this year but most media experts believe they will try to resurrect it and the decision to put ITV Digital into administration is part of this process.

The companies have ploughed £800 million into ITV Digital but yesterday put the company into the hands of Deloitte and Touche to stem losses.

As administrators prepared for crunch talks with League officials today, it also emerged that the two media companies are to receive a huge cash windfall from the Government.

The amount would cover the £178 million they still owe the Football League clubs, at least one third of whom face bankruptcy.

A confidential report, prepared by sports rights specialists Active Rights Management and obtained by the Evening Standard, shows Carlton and Granada will receive a government rebate worth at least £180 million over the next two years if they keep the channel on the air.

The report claims the rebate, an incentive known as the digital dividend set up by the Government to encourage free to air broadcasters to have their channels distributed on digital platforms, would more than cover the two £89 million payments owed to the League.

Carlton and Granada dispute the League's claim that they gave guarantees to underwrite those payments if ITV Digital couldn't afford them.

Mr Harris said: "One possible inter pretation of their behaviour is that their continued investment in ITV Digital has caused a short-term fall in their share prices which is an obstacle to their corporate ambitions."

Talks between the two companies stalled on 26 February, the day ITV Digital appointed Deloitte and Touche to conduct a review of the business and try to persuade the League to accept a cut of £128 million from the £178 million they are owed.

The League must open negotiations with Deloitte and Touche about recovering that money for its 72 member clubs.

For the next six months Carlton and Granada have pledged to provide short-term funding to keep ITV Digital going. But it is now up to Deloitte and Touche to decide what cuts should be made and whether to turn off the loss-making ITV Sport channel immediately.

Until their plans become clear, Mr Harris is telling club chairmen, staff and supporters not to panic.

"It is not doomsday yet," he said. "Administration is a legal manoeuvre to give companies breathing space. We have now got two short- term imperatives.

"The first is to get the £89 million we are owed this August and the second is to ensure our product is broadcast.

"I have spoken to a lot of chairmen and there are some who are now facing financial ruin, of that there can be no doubt, but we think it will be next season when the crunch comes.

"At the moment there is just a huge sense of uncertainty. How do clubs plan for their future? It is deeply unfair and I feel very let down."

Until ITV Digital stop broadcasting the Football League's games, its contract is still in place.

If the channel is taken off the air, Mr Harris will launch a £500 million legal suit against Carlton and Granada.

He will then look to re-sell its rights to another broadcaster, probably Sky.

Subscribers to ITV Digital will be able to carry on viewing while the company is in administration.

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