ITV Digital scraps subscription channels and sacks 1,100 staff

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ITV Digital was forced to pull its paid-for channels off air this morning, after no buyers emerged for the stricken broadcaster.

Some 1,100 of the company's employees were made redundant, while a further 500 at a call centre at Plymouth will only be retained in the short-term. The regulator, the Independent Television Commission, will offer ITV Digital's broadcast licences to any interested parties in a shortened bidding process.

Its remaining 800,000 subscribers will receive only free-to-air channels, such as BBC4 and ITV2. Even those services are guaranteed for only three weeks.

Michael Green, the chairman of Carlton, one of ITV Digital's owners, said: "It's a sad day for the staff of ITV Digital, for its customers, and its suppliers. And it's a sad day for digital television in Great Britain."

ITV Digital failed to negotiate the lowering of a crippling £315m contract it had signed to broadcast Football League matches. It was placed in administration at the end of March and put up for sale. The administrator, Deloitte & Touche, will seek buyers for its individual assets. However, the company appears to be heading for liquidation.

The demise of the country's only digital terrestrial television service leaves its customers stranded, puts its rival, BSkyB, in an even stronger position, and blows a hole in the Government's digital strategy.

Tim Yeo, the shadow Culture Secretary, said: "The failure of ministers to take steps so far has damaged the prospects for digital terrestrial television. Continued failure will sincerely threaten Britain's leadership in this important industry."

The Government wants to switch off the analogue signal by 2010, but first it must convince consumers to take up digital TV.