ITV Digital believed to be only worth as little as £10m
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Your support makes all the difference.ITV Digital could be worth as little as £10m, analysts said last night, as the disastrous pay-TV service was put up for sale.
Industry sources also suggested that the platform now has only 750,000 subscribers, a combination of the numbers that have cancelled their service in recent weeks and possible over-statement of the original customer figures.
Although there has been speculation that several private equity houses were lining up to buy ITV Digital, it is thought most, including Apax Partners and Warburg Pincus, have ruled themselves out.
The last reported subscriber numbers for ITV Digital was 1.26 million. However, up to 4,000 subscribers a day are now leaving the business – an annualised churn rate of 100 per cent.
ITV Digital was put into administration last month but Michael Green and Charles Allen, the chairmen of its joint owners Carlton and Granada, had hoped to use the process to reduce its costs, especially a cripplingly expensive deal to screen football, and bring it back out of administration. But that required new agreements with the Football League, which rejected a £74m offer, and other suppliers, such as BSkyB and the BBC. One industry source said: "There were talks with BBC and Sky about a more collaborative future. Neither gave up enough to help."
Analysts said Carlton and Granada's decision to walk away from ITV Digital would be welcomed in the City. Carlton and Granada will save investing £300m still due under ITV Digital's pre-administration business plan. Brandon DiMassa, of Dresdner Kleinwort Wasserstein, said: "This is good news. Investors had long ago determined that ITV Digital would not break even in a reasonable timeframe."
Carlton and Granada will have sunk about £1bn into ITV Digital by the time they finally get shot of it. And the Football League is still threatening them with a £500m lawsuit for ITV Digital's failure to honour its football rights deal. Carlton and Granada will join the long list of creditors to the pay-TV platform and may receive something if it is sold.
Even though ITV Digital is being sold on a debt-free basis, interest from financial buyers is thought to be muted. That leaves trade purchasers but many of the other players in this market, such as Telewest, NTL, UPC and Vivendi have their own problems.
Mathew Horsman, an analyst at Investec Henderson Crosthwaite, said: "The perfect solution would be for the BBC and Sky to take it over but that's the very solution the regulator won't allow."
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