'Greed caused ITV Digital crisis'

THE Football League has accused the owners of ITV Digital of plunging English football into its biggest ever cash crisis purely for corporate greed. League chairman Keith Harris said parent companies Carlton and Granada had reneged on the £315m football deal because it was 'inconvenient to their corporate ambitions'.

The 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 ploughed £800m into ITV Digital but on Wednesday put the company into the hands of Deloitte & Touche to stem losses.

As the administrators prepared for crunch talks with League officials, it also emerged that the two media companies are to receive a huge cash windfall from the Government. The amount would cover the £178m 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, shows Carlton and Granada will receive a Government rebate worth at least £180m over the next two years if they keep the channel on the air.

The report claims the rebate, set up to encourage free-to-air broadcasters to have their channels distributed on digital platforms, would more than cover the two £89m payments owed to the League. Carlton and Granada dispute the League's claim that they gave guarantees to underwrite the payments.

Harris said: 'One possible interpretation 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 review the business and try to persuade the League to accept a cut of £128m from the £178m owed.

The League must open negotiations with Deloitte and Touche about recovering that money for its 72 clubs. Carlton and Granada have pledged to provide short-term funding to keep ITV Digital going for six months. Deloitte and Touche will decide what cuts should be made and whether to turn off the lossmaking ITV Sport channel immediately. Until their plans become clear, Harris is telling club chairmen, staff and supporters not to panic. 'It is not doomsday yet,' he said. 'We have two short-term imperatives. The first is to get the £89m we are owed this August and the second is to ensure our product is broadcast.'

Shares in Carlton and Granada failed to benefit from the decision to ITV Digital into administration. Carlton fell 1/2p to 271 1/2p with Granada losing 5 1/2p to 137p.

BSkyB, hailed as the major beneficiary of ITV Digital's demise, advanced another 17 1/2p to 832p. But Pace Micro Technology, which supplies set top box decoders to ITV Digital and ailing cable giant NTL, fell another 2p to 69p.

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