ITV Digital (Hansard, 10 April 2002)

§ Lord Corbett of Castle Vale
asked Her Majesty's Government:
What is their assessment of the consequences of the collapse of ITV Digital.

§ The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone)
My Lords, ITV Digital decided to place the company into administration with funds to keep services going for the time being. This was a commercial decision for the company, and the company alone, to take. Viewers will continue to receive all the free-to-air and pay services which they are used to while a solution is sought. The administrator is negotiating with suppliers, including the Football League. We cannot speculate on the outcome of those negotiations.

§ Lord Corbett of Castle Vale
My Lords, I thank the Minister for that response. However, if ITV Digital collapses, would that not be rather like awarding a disputed penalty at extra time to BskyB in order to add commercial digital domination to its satellite and cable stranglehold? Would that not give it almost complete control of pay-per-view services after it has priced companies such as ITV Digital out of the market?

§ Baroness Blackstone
My Lords, I am not sure about the "penalties in extra time" analogy. At this stage, it is very difficult to anticipate the outcome of these negotiations. It will, of course, be a matter for the ITC, as the independent regulator and the body which provides licences, to take these matters further. However, any acquisitions would, of course, be subject to UK and EU competition law in the usual way. Competition legislation gives strong powers to ensure proper competition, and that would be a matter for the competition authorities.

§ Baroness Anelay of St Johns
My Lords, how much blame for the crisis at ITV Digital does the Minister lay at the door of BskyB because of its refusal to carry ITV Digital's sport channel at a reasonable cost? What influence will that have on the Minister's approach to the provisions in the forthcoming communications Bill for the must-carry rules?

§ Baroness Blackstone
My Lords, in the rather complex set of issues involved in these circumstances, I do not believe that all the blame can be put on BskyB. The contract which Granada and Carlton signed with the Football League involved extremely high payments. Their income has not been sufficient to allow them to pay the Football League at that level. I believe that that is as far as I can go.

§ Lord Faulkner of Worcester
My Lords, my noble friend referred to the negotiations with the Football League. She will be aware that, if the contract collapses in the way that it appears it may, the effect on the finances of certainly the smaller clubs could be catastrophic with perhaps as many as 30 going out of business. While one would not suggest that the Government should do anything to help, can my noble friend reiterate the points that her ministerial colleague, the Minister for Sport, made yesterday? He said that this is a very good moment for football to reassess its costs and its income and to avoid the problem of spending money before it receives it on 413 players' wages, transfer fees and other unreasonable costs. Did she, for example, read the comment in Saturday's Guardian by the owner of Birmingham City, who admitted that his club had spent too much money on signing too many players on too high wages? Is not the answer, as Mr Caborn said yesterday, a cap on players' wages and the introduction of some performance-related pay?

§ Baroness Blackstone
My Lords, my noble friend has raised many issues. I did not see the article in the Guardian about Birmingham City. However, the Government do not believe it is likely that as many clubs will find themselves bankrupt as a result of the current position as is sometimes claimed. But I want to support what my noble friend said about the importance of football clubs operating within their means, as is the case with any other business. Some nine clubs in Divisions 2 and 3 are paying wages which exceed their total turnover. Many clubs are paying wage bills which are more than 90 per cent of their turnover. That is not a situation which any business can properly sustain. It is important that football clubs try to put their house in order in that respect, although the Government sympathise with the predicament in which many clubs find themselves.

§ Lord McNally
My Lords, does the Minister recall that when previous crises occurred in the media industries, such as those of The Times and British Satellite Broadcasting, the government of the day were bounced into solutions which were not necessarily in the broader national interest? Will she assure the House that the Government will keep their nerve over the future of this digital platform? Will she assure the House that they will not take short, sharp solutions but will look, for example, at the possibility of the platform being used as a free-to-air platform? Can she also tell us whether the development in ITV Digital will in any way delay the planned legislation?

§ Baroness Blackstone
My Lords, I see no reason whatever why the planned legislation should be delayed. In fact, I believe that there is all the more reason to continue and make progress with producing the draft Bill, as has already been indicated, to a timetable close to that already suggested. With regard to whether or not the Government will keep their nerve, of course they will do so.
Perhaps I may return to the issue of football raised by the noble Lord, Lord McNally. Over the past 15 years, football has survived a number of crises, including the one which was said to be likely as a result of the need to upgrade grounds in response to the Taylor report into the Hillsborough tragedy. At that time, many commentators said that large numbers of football clubs would go into liquidation. That did not happen.