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Culture secretary Tessa Jowell's Commons statement on ITV Digital

LONDON - With permission Mr Speaker, I would like to make a statement on ITV Digital. As the House knows, the ITV Digital administrator, Deloitte & Touche, announced yesterday that it is preparing for the short-term sale of the business and its assets.

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This is an issue with reverberations far beyond the boardroom of ITV Digital. It directly affects the 1m ITV Digital subscribers, the company's staff, its creditors, its programme suppliers and the clubs, fans and supporters of the Nationwide Football League.

And government too, has a direct interest. We too are concerned for those millions of people and hundreds of businesses who are watching closely to see whether they will be able to recover something from the sale of the company.

That is why it was a great shame that ITV Digital was not able to come to a deal which was acceptable to the Football League, one of their biggest creditors, why I have spent so much of the last few weeks encouraging all the parties to the talks on restructuring the company to keep going. To keep negotiating. But this week, time ran out for ITV Digital and its creditors.

And now the usual commercial processes must take their course.

As this is a complex and fluid situation, I will continue to keep the House updated in coming weeks.

The situation

I would like to set out for the House the next steps in what has been a confusing, and is still an uncertain, process.

My first concern now is for the subscribers to ITV Digital. For the time being, ITV Digital subscribers are continuing to receive a service, including the free-to-view services enjoyed by all digital viewers.

But the ITV Digital pay-TV services will last only as long as the company's suppliers are willing to continue to supply their programmes and services.

This depends on negotiations currently underway between the suppliers and the administrator. It is possible that some suppliers will have no choice but to withdraw their programmes.

If and when the service for which the licences have been granted cease to be provided and the licensee no longer fulfils the terms of its licences, the Independent Television Commission will begin the process of revocation of the licences for the digital terrestrial multiplexes formerly used by ITV Digital.

Having revoked the licences, the ITC will then re-advertise them in an accelerated process that is likely to take six weeks.

In the meantime, I understand that the administrator is arranging for all existing subscribers to be kept informed of the position by on-air announcements and by letter. This is vital. ITV Digital subscribers are innocent parties in this matter. They deserve to be given all the advice and information possible while the administrator and others work to preserve their TV service for the future.

Looking to the end of this stage, the administrator remains confident that a sale of the business can be achieved. I have of course received representations from the Hon Members for Battersea, Camarthen West, Preseli Pembrokeshire, and Plymouth Devonport and Plymouth Sutton concerning the more than 1,500 members of staff affected. I pay tribute to their efforts and hope that the work of the administrator will lead to a satisfactory outcome for their constituents.

And I am confident that the free-to-air services will remain in place without disruption.

Football

As the House will be aware, ITV Digital entered into a contract with the Nationwide Football League. The TV rights to broadcast Football League matches were reported to be sold to ITV Digital for £315m. I understand that the Football League has so far received £137m of this contract and £178m remains outstanding. This was the object of negotiations in recent weeks between the Football League and ITV Digital and, subsequently, its administrator.

Clearly, the failure of ITV Digital to meet its contract with the football clubs will be a further blow for many that are already facing financial difficulties. I welcome the fact that the chief executive of the FA will bring together the various organisations with the power to help navigate football and the clubs through this difficult time. Government will offer all support to the efforts of that group.

Supporters Direct, established by the government in 1998 has already helped 31 of the 72 Football League clubs by enabling supporters to invest through supporters trusts. We expect that Supporters Direct will take a prominent role in helping to secure the future of clubs over the coming months.

In many communities football clubs are a powerful force for good. They are a source of local identity and of pride. Many of them run successful schemes to get people involved in the sport and help them develop their talent, and use their sport to attract young people into education and positive involvement in the community.

The anti-racist and social cohesion work through 'Football in the Community' and the 'Playing for Success' scheme run in conjunction with the Department for Education and Skills are two powerful examples. Football hasn't asked the government to bail it out financially but we want to do all we can to offer clubs support at this difficult time.

I have been in regular contact with representatives of the Football Association, Football League, and Premier League. We will continue to offer help to clubs in terms of support to players and staff who find themselves suddenly out of a job. And just this week my right honourable friend, the Minister for Sport, had a very positive discussion with the football authorities and Sport England to ensure the resources are provided to secure future of the Football Youth Development Programme.

Digital television

Yesterday's announcement represents the collapse of a brave commercial enterprise to launch an entirely new digital platform. The business has made commercial judgements which have turned out to be unsuccessful.

There is always a risk in such ventures, especially in relation to markets built on new technology. It is precisely for this reason that I would not intervene directly on what is essentially a private matter between a company and its creditors. The government's role is to protect the wider public interest.

Apart from regular contact with the companies concerned, I have been in day-by-day contact with the ITC whose responsibility it is to regulate the commercial broadcasters.

I have also had meetings with representatives of the Football League and the FA.

My aim in all this has been to keep a discussion going as to how to maintain a service for digital terrestrial viewers.

Clearly the current events have been a setback. But it is important even at this difficult time to remember the broader context.

The government helped create a very good climate for digital TV in the UK. Twice the number of UK homes have access to digital television than the European average.

Thanks to government action, digital TV has grown faster in this country than mobile phones, the internet and even than colour TV:

* We have created an excellent regulatory framework for digital TV in general. Our Digital Action Plan provides the route map to digital switch-over by 2010. We have brought industry, broadcasters and consumers together -- the key players who will make switchover happen

* All material obstacles to improving the power have been removed, subject to the need to prevent interference with existing analogue signals.

* Carlton and Granada, the owners of ITV Digital, were assisted by a rebate on the tax levy on their analogue Channel Three licences for every household to which they provided digital services. This rebate -- the so-called digital dividend -- is worth tens of millions of pounds.

* Our settlement for the BBC licence fee has enabled the BBC to expand its output of digital TV services.

As a result, digital TV in the UK has grown faster than in any comparable country and is received by nearly 40% of UK households. No country in the world has done more to nurture the digital revolution. No country has seen such success as a result. Britain is a world leader in digital technology and digital reach.

We have very good reasons to be positive about the future as new cheap set-top boxes come on the market and scope increases for improved quality of picture and reception. We expect to see these roll out as soon as the current uncertainty has been resolved. As I have made clear, I expect that uncertainty to have been resolved within a matter of a few weeks.

The hard truth is that this is a failure of a company, not of a technology. New entrants now will deal with a better understood technology and an established infrastructure.

My contact with the industry suggest that there are established and new industry players wanting to have a go at making this proposition work. They will now go forward either to the administrator or will be able to firm up their expressions of interest as part of any ITC re-tendering of the licences.

I also commend the work of the administrator, who has acted throughout with significant forbearance and professionalism.

Conclusion

I have always made clear that the switchover process must be driven by consumer demand. In any new technology, there are often bumps on route.

This has been one. But I agree with the Consumers' Association that the most important thing now is to restore certainty and predictability for consumers so that they can make their own, informed choices.

It is clear that digital terrestrial television has an important role to play in the digital future. It is a natural migration path for analogue viewers who are accustomed to receiving their television services through their aerials and it is potentially universal in its availability. This platform must continue, to ensure that all viewers have a full range of options, in a competitive and dynamic environment.

Digital television has the potential to bring enormous opportunities and benefits to families all over the country.

Digital households enjoy a wide range of channels, and a wide range of additional benefits including interactive programming, information services that provide education and entertainment, and even access to the internet.

The success of digital television should not be equated with the position of one commercial operator. The fact that ITV Digital has not succeeded will not deflect us and the broadcasting industry from making a reality of the digital future. Digital TV is more than ITV Digital.

There is a real opportunity to benefit from the expertise and technical experience now existing in the UK to build a successful business, and I am confident that we will keep our world leadership in digital services and technology.

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