We’ve been here before. The administrator of ITV Digital may still be trying to restructure the business, but its success remains in doubt and Carlton and Granada are refusing to fund it any further. Deloitte & Touche has told the High Court it is still preparing the business for sale. So it’s worth reminding ourselves what happened when earlier commercial TV companies went out of business. Did screens go blank? And what did the regulators and government do to try to put matters right?
ITV companies have regularly got into financial trouble over the years. From the disasters of the Fifties, before a TV franchise became a licence to print money, through the troubled launches of LWT (taken over by Rupert Murdoch, till he got booted out by the Independent Television Authority) and TV-am (rescued by Roland Rat, Greg Dyke and Bruce Gyngell), the fear of those in authority has always been blank screens.
The prospect of a disgruntled proletariat, deprived of their TV opium and taking to the streets, was to be avoided at all costs. When regional ITV companies got into difficulties, arrangements were made for a neighbouring contractor to fill the gap. Ironically, the only time ITV screens really went blank – apart from the 11-week strike of 1979 – was when the ITA’s own transmitter mast blew down in Yorkshire, plunging thousands of homes into an ITV void for several weeks.
But the most immediate precedent is that of British Satellite Broadcasting, which shares more than a few of ITV Digital’s characteristics, including its building, the grandiose Marco Polo House (named after the ill-fated satellite which carried the BSB service).
BSB effectively ceased trading at the end of 1990, a victim of the bloody head-on platform war with Sky Television. Like ITV Digital, its transmission technology proved less robust than Sky’s, its management less effective, and its marketing more successful than its performance. Like ITV Digital, one of its major shareholders was Granada.
When the combined losses of BSB and Sky reached &£14m a week, the companies merged to form BSkyB, which went on to make almost as much money as the two companies separately had lost. Did the BSB screens go blank? Were the legendary squarials rendered obsolete over- night? They were not.
Even though the Independent Broadcasting Authority (IBA) had been furious at the unauthorised merger of one of its licensees and a Murdoch-controlled outsider (it had not even been consulted, let alone given its approval), it did not prevent the merger. Nor did it allow the BSB screens to go blank. It concluded that “immediate termination of the contract was not seen as in the interests of viewers”. It allowed a two-year stay of execution, to give time for viewers to make other arrangements. Meanwhile, Sky offered free receiving equipment to BSB subscribers who wanted to make the switch.
And what happened to BSB’s broadcasting licence? In April 1992, the Independent Television Commission (ITC) invited “expressions of interest” in providing replacement services on the Marco Polo satellite. But within three months it had announced: “The commission has reluctantly concluded that none of the proposals would have resulted in applications which would have satisfied the requirements of the Broadcasting Act.” And that was the end of that.
Of course, if ITV Digital does go bust, screens will not go completely blank. As it delivers its service via the ordinary TV aerial, viewers will still be able to watch their normal four or five terrestrial services without any need for the ITV Digital box.
But they will lose all their pay-services – Sky One, Play UK, UK Gold, UK Style, UK Horizons, Carlton Cinema, Nickelodeon, the Comedy Channel, Carlton Cinema, the Cartoon Network, MTV, Eurosport, Discovery, Granada Plus, Men & Motors and E4, plus the premium sport and movie channels. As with BSB, we can expect Sky to offer viewers a good deal to switch to satellite.
And what will happen to the million or more set-top boxes if ITV Digital goes out of business? The BBC is investing millions of pounds in free-to-air channels and will want those boxes to remain in place. So will the Government, which still hopes to achieve analogue switch-off by 2010. But John Enser, of media lawyers Olswang, says if liquidators are called in, they would have to act in the interests of the creditors, not the Government. They would have to decide if it makes more financial sense to collect all the boxes and sell them to a third party, perhaps in another country.
Behind the scenes, every alternative is being discussed. How quickly could ITV Digital’s licence be re-advertised and awarded? Could the BBC step in on a temporary basis to keep the whole venture afloat while other buyers are sought? What role could BSkyB play without breaching competition rules?
And this is where the current situation differs from that of BSB 12 years ago. This time everyone – even the ITC – knows D-Day may be imminent and are preparing accordingly.
Torin Douglas is media correspondent for BBC News