ITV's Allen threatens analogue switch-off to save £450m

Sam Matthews,, brandrepublic.com, 19 July 2004, 10:40AM

LONDON - ITV chief executive Charles Allen is threatening to make all ITV programmes only available to digital viewers in an attempt to reduce its £200m-a-year analogue licence fee.

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The plan, drawn up by Allen, will mean handing back the £200m analogue licence to the government and freeing £250m a year from its public service broadcasting duties.

Allen has told Ofcom, the communications regulatory body, that it will be uneconomic for ITV to continue as an analogue broadcaster.

Switching over from analogue would entail losing half of ITV's audience figures because only 4m homes in the UK have access to digital TV.

The move to digital would also hit the broadcaster's advertising arm hard. ITV currently earns £2bn in advertising revenue as the UK's largest commercial channel. If the audience figures halved, ITV's reach would also halve and advertisers would turn to Channel 4 or Five for larger audiences.

However, the rise in digital TV, backed by a boom in Freeview set-top box sales, now means that more than 13m homes in the UK have access to digital TV. This number is expected to rise as other competitors enter the market and the digital medium becomes more affordable.

The analogue licence is expected to be renewed in December when Ofcom will offer terms to broadcasters rather than putting them out to tender. No such offer to a licensee has been rejected to date.

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