Digital collapse puts Blair’s TV target in doubt

Falkirk East MP Michael Connarty described Tony Blair’s policy as "a dog’s breakfast, badly thought-out and damaging for the future". He added that unless Blair did more to help innovative UK companies, the market would be dominated by French and German rivals.

Connarty was responding to the collapse last week of ITV Digital, which is the latest setback on the road towards moves to transform Britain’s entire television network from analogue to digital by 2010.

"We badly need a public satellite system, run in conjunction with a major British plc, but just at the very stage when the government should be driving this policy along, they are making no attempt to sell the idea properly, and this is turning into another Railtrack," said Connarty.

His words reflect a mounting disenchantment with the lack of progress made by the government in spreading the digital vision.

"The administration faces a stark choice: either it becomes severely interventionist and invests properly in the future or it will allow the Germans and French to step in when the markets pick up," said Connarty.

Meanwhile a growing number of legal experts believe the Football League will fail if it pursues a bid to sue Granada and Carlton for 500m following the collapse of their joint venture company, ITV Digital.

It is understood that there is no clause in the Football League’s contract with ITV Digital stipulating that Granada and Carlton will provide financial assistance should their joint venture run into trouble.

Without a contractual obligation to stump up the 178m ITV Digital still owes the Football League, most lawyers now believe Granada and Carlton are more likely to be forced to dig into their pockets as a result of consumer lobbying rather than legal intervention.

Andrew Sleigh, a corporate partner at Burness, said: "When a contract of this type is being drawn up, it would be normal for the lawyers acting for the recipients of funding - in this case the Football League - to recommend that they obtain specific financial guarantees from the other party’s main backers - Carlton and Granada.

"However, it is quite common, when completing business deals, for this advice to be disregarded - the reason being that an alternative offer may be worth considerably less, or perhaps there is no other offer available."

The Football League is considering suing Carlton and Granada after the two companies put ITV Digital into receivership last week. ITV Digital still owes the Football League 178m of the 315m media rights contract it signed last year. It is feared as many as 30 clubs could be financially ruined if the contract is not honoured.

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