ITV Digital in administration

March 27, 2002 Posted: 11:13 AM EST

LONDON, England - British pay TV operator ITV Digital has been placed in administration after it failed to reach an agreement with the Football League.

ITV Digital made the application to the High Court in London on Wednesday.

The move was necessary after the league refused to accept ITV Digital's proposal of a cash cut of almost £130 million ($184 million) over two years -- a change to terms of a contract agreed in June 2000.

ITV Digital's owners, Granada and Carlton Communications, had warned they would close the digital channel unless they could cut costs. The channel would continue "business as usual," a spokeswoman told the UK Press Association after the application was made on Wednesday.

She added the move into administration would "protect" the channel while urgent restructuring work was carried out.

The Football League say more than one third of the 72 member clubs in first, second and third divisions in English soccer will go bankrupt if they do not get the money they have budgeted for from ITV Digital screening their games.

ITV Digital which owes £178.5 million from an original three-year £315 million deal to broadcast their matches.

A statement from ITV broadcaster Carlton said short-term funding would be provided to the service.

The league has threatened a £500 million lawsuit if it does not receive £178 million owed for broadcasting Nationwide League and Worthington Cup matches.

Football league officials were meeting on Wednesday to discuss the matter.

Accountancy firm Deloitte & Touche have been put forward as administrators.

Analysts have said placing the business into administration would be likely to lead to its closure.

The closure of ITV Digital would mean the loss of 1,800 jobs at ITV Digital, Reuters news agency reported.

Closure would also dent Britain's ambition of becoming the world's first fully digital nation by 2010.

Britain is the world leader in digital TV uptake, with 40 percent of households converted to digital. Digital TV offers Internet access and email through TV, pay per view and interactive services -- including home shopping -- via remote control.

It would also reduce competition for Rupert Murdoch's satellite service BSkyB, which has the rights to broadcast English Premier League soccer matches.

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