Jason Nissé: Morals are at risk as ITV Digital's long Good Friday approaches

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The Independent Online

Imagine the scene. The phone rings in Charles Allen's office. It's Niall Fitzgerald, the chief executive of Unilever.

"Charles," he says, "the economy's not been doing so well. We're only going to pay you 50 per cent of the price for all these adverts we've booked during Coronation Street. "

"You can't do that," splutters the Granada boss.

"Well that's what you are doing to the Football League."

While the lawyers pore over the agreements between ITV Digital and the League, the Companies Act and any other relevant documents to see if there is any way of making Carlton and Granada pay what ITV Digital owes to football, those who care about corporate ethics throw our hands up in despair. The sort of people who put subsidiaries into administration so as not to pay up on a contract have more in common with a second-hand car salesman than with Sidney Bernstein, Granada's liberal founding father.

Granada and Carlton have a moral responsibility to honour the contract they signed with the Football League. It is a shabby moment in their corporate history to use the threat of closing down ITV Digital to try to get a £130m cut on the £315m they agreed to pay for live Football League coverage only 18 months ago.

Carlton and Granada argue that

A: they are only shareholders in ITV Digital and so it is not really a subsidiary; and

B: if the Football League does not cut its costs, the service is insolvent and they'd close it down anyway.

The first argument is specious. ITV Digital is a joint venture run by the companies that control ITV, companies that would merge if they were allowed to and have made no secret of this. Carlton has described ITV as "vertically integrated" – in other words, it sees no join between the digital service and good old ITV. If the duo close ITV Digital they will still run the ITV2 digital channel and hope to hold on to the higher-profile, more lucrative Champions League football. Finally, look at the ITV Digital board. Is it not dominated by Carlton and Granada directors?

Which brings us to the second argument. The TV companies have been on to a loser with ITV Digital ever since the regulators stopped BSkyB being a partner. Robin Miller, chairman of Emap, once told me that the cardinal rule of the media world was not to take on Rupert Murdoch. Carlton and Granada did, and they did it with the Sinclair C5 of broadcasting. If ITV Digital is bust then it is the fault of its backers. They have to shoulder the blame and the pain.

Carlton has a board meeting tomorrow and Granada later this week. ITV Digital could be dead by Easter. But what then? The administrators will have to decide what to do about 1.2 million set-top boxes that have been given to ITV Digital subscribers. I suspect they will not want to go to the trouble and expense of collecting them, so these households will be able to get 12 or more free-to-air digital channels, without having to bother with subscribing for a pay-TV service.

As for the pay-TV element of ITV Digital, it is the ultimate irony that there are quite a few potential buyers at a knock- down price. Telewest may have little money, and NTL even less, but together they could scrape up enough to buy the service as an add-on to their cable offer. Channel 4 could be interested. As could RTL, Channel 5's backer.

And then there is BSkyB. Sure the Independent Television Commission did not want Sky in terrestrial digital two years ago, but now the game has changed. If this service is not viable without Sky involved then the regulators will have to take a more robust view. Given that the Media Ownership Bill is due shortly, and will prevent Mr Murdoch from buying into ITV or Channel 5, Tessa Jowell might be willing to relax the position on digital pay-TV. BSkyB's effect on English football has been largely beneficial, improving audiences both on TV and at the grounds. ITV Digital will only add to the poverty of football's underclass, encouraging lower division football clubs to spend money in the expectation of income that will now not materialise.

It is a curious twist of the ITV Digital tale that we could end up with Rupert Murdoch as the white knight, and Carlton and Granada mired in a moral trench. The reputations of these two public companies may never recover from this inglorious episode.

j.nisse@independent.co.uk

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