Deloitte & Touche in last-ditch attempt to sell ITV Digital before liquidation

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The Independent Online

The administrators of ITV Digital were last night frantically assessing whether there were any credible bids among the expressions of interest in the stricken pay-TV service or it will be put into liquidation, possibly today.

The administrators, Deloitte & Touche, believe that two of the interested parties could be serious contenders to take on ITV Digital. There have been dozens of other approaches which are not being given credence.

Content supplies to ITV Digital, such as Rupert Murdoch's BSkyB, will be told this afternoon by Deloitte & Touche whether either of the two leading bidders offers a viable future for the broadcaster. Industry sources are sceptical of a rescue at this stage. Most believe that any potential purchasers will wait for ITV Digital to be put into liquidation.

If Sky is not satisfied with the credibility of the potential purchaser, it will pull its content off ITV Digital tonight, taking away the main attraction for viewers and buyers of the digital terrestrial platform. Sky has been supplying its popular film and sports channels for free for the past few days but it is no longer prepared to do so.

A spokesman for Sky said: "We will continue to provide content until the end of Tuesday and then we will require clarification on a number of issues."

Sky's satellite operation is ITV Digital's main competitor service, and the withdrawal of its channels would cast it in unfavourable light as the catalyst for its rival being put into liquidation. Sky is separately under investigation by the Office of Fair Trading for abusing its dominant position in the pay-TV market. The OFT's preliminary finding is that Sky has been over-charging competitors for its content – ITV Digital's owners, Carlton and Granada, have pointed to this as one of the problems that undermined their business plan.

The demise of ITV Digital will only further bolster Sky's position. It has 5.7 million subscribers, compared with 2 million cable customers and the 1.26 million that ITV Digital accumulated before it was put into administration at the end of March.

Most of the companies touted as possible buyers of ITV Digital have denied any interest, including BT, Centrica and Microsoft. Sky may want to take over ITV Digital itself but it would face formidable regulatory hurdles. An executive at another television company said: "I can't imagine who'd want to buy it or why. The only plausible scenario is for ITV Digital to become a free service."

The BBC, which needs ITV Digital as a distribution platform for its new digital channels, is known to want to turn the service into a broadcaster of free channels, such as its BBC4. It remains unclear how the BBC could be allowed to use licence payers' money for such a venture or whether it is possible to rescue the platform through the corporation's commercial arm, BBC Worldwide.

One media executive who has explored the possibility of buying ITV Digital said it was a "dead duck" in its current form. He said it would be put into liquidation and then those with alternative business models may pounce. He added: "We hear a lot about this [rescue] being a private equity deal. It's not. The private equity boys have looked at it and it's not one for them."

If ITV Digital is put into liquidation, Deloitte & Touche will try to sell off the assets of ITV Digital piece-meal, including its installed base of set-top boxes, its technology and subscriber list. The regulator, the Independent Television Commission, would re-advertise its broadcast licences.