Football clubs may back down from battle with ITV Digital

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A crunch meeting of clubs belonging to the First Division of the Football League tomorrow could seal the fate of ITV Digital, as the sport decides whether to press on with a £500m lawsuit against the pay-television company or go for a settlement over a disputed rights contract.

The meeting could resolve to lodge a legal objection to the appointment last week of Deloitte & Touche as administrators to ITV Digital because the accounting firm was previously the financial adviser to ITV Digital.

The chairman of the Football League, Keith Harris, and David Burns, chief executive, have been summoned back from holiday to account for their response to ITV's decision that it will not honour a £315m deal signed in 2000 to televise the league's matches. Still owed £179m under the contract, the league has said it will not accept the £50m offered by ITV to cover the remainder of the agreement. The league's executive will have to present its legal position to the assembled 24 First Division chairmen.

Simon Jordan, chairman of Crystal Palace, told The Independent: "This [meeting] is about establishing the right way forward, making sure everything is as it should be and that our mandate is being followed 100 per cent. Once we are comfortable and confident about where we are, there is a possibility of finding a deal that is good for both sides."

Mr Jordan said it was important that the First Division presented a united front at the meeting. He called the decision to put ITV in administration a "standard corporate trick" and he stood by the league's demand that the £179m outstanding be paid.

"If they [ITV Digital] thought they had no obligation, they wouldn't even have offered us the £50m," Mr Jordan said.

The rights deal was only ever signed as a "short-form" contract which, according to ITV, did not contain guarantees from its parent companies, Carlton and Granada. The league has insisted ITV Digital's original bid document to televise the game contained these guarantees and that the company constantly frustrated attempts by the league to conclude a full-length legal contract which would have set out Carlton and Granada's obligations.

ITV sources suggested some First Division clubs were already pushing for the league to return to the negotiating table, instead of threatening a lawsuit. The TV company also hopes that once Mr Harris and Mr Burns present the league's legal case before the chairmen at tomorrow's meeting, the weakness of the clubs' position will become apparent.

It will now be up to Deloitte & Touche to hammer out a new deal with the league, if the football authorities re-open talks. The First Division gobbles up 80 per cent of the league's television revenues, so its stance on the issue is vital. Carlton and Granada hope to bring ITV Digital out of administration once the football contract and other supplier deals are re-negotiated.

Separately, the administrators of ITV Digital will decide in the next two weeks whether to join a $1bn (£700m) court case brought by Canal Plus against NDS, a News Corporation business, which is accused of helping pirates to counterfeit the pay-TV smart-cards produced by Canal Plus. ITV Digital, a Canal Plus customer, has suffered a major piracy problem.

Last night, Centrica, the energy and telecoms group, denied a report that it was considering getting involved in a possible bail-out of ITV Digital. Centrica held talks about taking a stake in the business last year but said it was no longer interested.