ITV raises alarm at pounds 40m bill for switch to digital

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ITV companies are balking at the high cost of introducing digital terrestrial television (DTT) in the UK, and may lobby the Government to make radical changes to the planned service.

According to confidential figures prepared by the ITV companies, DTT - planned for early 1998 - will cost them a net pounds 40m in the first year, even counting the advertising revenues the service could generate.

The costs would be highest for the big ITV licence holders, with Carlton expected to cough up pounds 12m, Granada about pounds 10m and United News & Media, which controls the Anglia and Meridian franchises, about pounds 7.5m. Even the smaller companies, such as HTV, could be required to spend more than pounds 2m in the first year.

Just broadcasting the existing schedule, a requirement of the DTT licence, would cost the ITV companies pounds 10m a year, the figures show. The rest of the budget would be spent on a basic package of extended services, such as repeats of favourite programmes. "That's a lot of money just to have time-shifting," laments one ITV executive.

The Department of National Heritage, headed by Virginia Bottomley, had been hoping commercial broadcasters would confirm their intention to take up their allotted space on the planned DTT service by September. But that deadline has now been pushed back to 15 October, as the companies review their business plans.

The ITV companies could request changes to the licence period, or even push for a subsidy to encourage the take-up of set-top boxes needed to receive the DTT service.

DTT is part of the Government's ambitious plan to free the analogue capacity now used for mainstream television, and auction it to other users - for example, companies requiring closed networks. The plan had been to encourage existing terrestrial broadcasters onto DTT, and switch off the analogue TV system in several years' time.

The BBC, ITV, Channel 4, S4C and Channel 5 have all been guaranteed carriage, but only the BBC has so far unveiled plans to roll out a DTT service. The rest of the capacity would be auctioned off to private companies, and the Government had initially hoped big ITV franchise holders might come together to bid for additional channels.

The debate about DTT has become more pressing following moves by Rupert Murdoch's BSkyB to introduce digital satellite services from next year. The company promises as many as 200 channels, and the BBC has already said it would seek to broadcast its new digital services via satellite. It emerged earlier this week that the BBC is in talks with BSkyB about jointly developing digital services based on the corporation's extensive library and programme-making capabilities. Granada, the second largest ITV player, has already announced the launch of its own satellite channels, in partnership with BSkyB.

"We are worried that Murdoch will get to digital first," an ITV source said. "What would then be the point of DTT?"

The terrestrial system would carry far fewer channels, perhaps 18, according to the Government's own estimates.