£38m dispute set to reach court after ITV refuses offer of opt-out

STV chief executive Rob Woodward yesterday revealed that ITV refused to take the programme opt-out row to arbitration.

The two firms are locked in a dispute which is now likely to be heard in the courts after ITV said it would proceed with its 38 million legal action.

It claims STV owes it money for choosing not to broadcast network shows such as The Bill and the costume drama Wuthering Heights.

Mr Woodward has promised to "make the process more complex" and said the company will reveal its next move in its interim management statement, due early next month.

STV is expected to counter-sue ITV for allegedly withholding advertising revenue.

"We have been working behind the scenes with Ofcom (the regulator] to encourage some form of arbitration which would be the sensible thing to happen," he said.

"Ofcom has volunteered to go through binding arbitration, but unfortunately ITV has refused to enter into a binding arbitration process. Without both sides wanting to participate arbitration becomes impossible. They have decided to go ahead with legal action."

Woodward defended the policy of opting-out, despite an outcry from some viewers.

He is building the defence around the devolution legislation that allows for it to pursue this policy.

Unveiling a new series of programmes that would make STV "more relevant" he said the station had been criticised for not being Scottish enough.

He shared ITV executive chairman Michael Grade's view that relations between them were tense.

Woodward said he expects further collaboration with the BBC in sharing facilities and technology but said he wanted STV to be part of a "vibrant channel three network."

An ITV spokesman said: "We are currently taking legal action against STV to recover a gross debt of 38million, which has accumulated as a result of STV not honouring its contractual contributions towards the Network Programme Budget.

"This year-long commercial dispute lies at the heart of the issue and could not be resolved by any form of arbitration. Ofcom cannot decide on a commercial matter of this kind which is why ITV is not pursuing this particular course of action."