Growth in ITV Digital subscriber numbers falls by half

ITV Digital yesterday reported a near-halving of its customer acquisition rate but the 46,000 subscribers added in the lead-up to Christmas was ahead of most forecasts.

The new homes gained in the fourth quarter of 2001 took the pay television service's total customers to 1.26 million. That compared with the 218,000 net subscribers added by its main rival, BSkyB, over the same period, and the 82,000 put on by ITV Digital in the third quarter.

Rob Fyfe, ITV Digital's managing director, said: "Our plan since April has been to deliver steady growth in subscribers and to control our cost base. These results demonstrate that we are achieving that aim."

Annualised average revenue per subscriber was £225 – against the £311 recently reported by Sky. ITV Digital, which is jointly owned by Carlton and Granada, saw its churn rate – the proportion of customers who leave the service – increase to 24.9 per cent from 23.1 per cent for the previous three months. Churn at Sky is some 10 per cent.

ITV sources said the increase in churn was expected and will probably go as high as 30 per cent later this year. In 2000 and the earlier part of 2001, the company's dash to add customers by offering various incentives saw it take on subscribers who were not necessarily committed to the service. In the fourth quarter of 2000, 134,000 customers were taken on.

That emphasis has now changed to take on fewer, more profitable customers and squeeze more revenues from existing subscribers. ITV Digital's revised business plan needs about 40,000 new customers each quarter to break even by 2004. However, it was suggested yesterday that even this may prove challenging if, over the traditionally bumper Christmas season, only a few thousand more than this target was taken on.

But the figures reported yesterday were a side-show to the channel's broader strategy, which is yet to be activated. ITV Digital and the BBC are to talk over a digital partnership which should allow ITV Digital to reduce losses dramatically and significantly increase its potential pool of subscribers.

ABN Amro, the broker, estimated that ITV Digital will lose £207m this year, while its sister operation ITV Sport will show losses of £77m.