The Great Set Top Box Fiasco

Posted on 20 January 2003 in Television (No comments)

It looks like I spoke too soon when I wrote last night that the set top box issue will probably just slip into obscurity then leap out and haunt us.

Roughly two hours after I wrote those words, news came out that the whole fiasco was to have a line drawn under it - the boxes have been given away for free to those who have been 'looking after' them since ITV Digital's demise.

Our saviour?

After all the resentment and bad feeling the whole fiasco generated, the decision came from an unlikely source - Carlton and Granada.

This morning it was announced that the two media giants had bought all the old set top boxes for £3million. Upon doing this, the pair transferred ownership of the individual boxes, to ITV Digital's former subscribers.

It seems a remarkable act of generosity from a duo who brought down their own joint venture because they'd over-paid for some football rights.

So what's in it for them?

Obviously you have to wonder just what Carlton and Granada are getting for their money.

It cannot be denied that the demise of ITV Digital didn't do any favours to ITV's image. The decision to reclaim the set top boxes, although nothing to do with either company, also didn't help. Whilst the liquidated company had been renamed 'OnDigital 1998 Ltd' in a bid to disassociate the company from its former parents, the link would always have caused problems for the former owners. What's a couple of million to help restore your image?

And then there's ITV2.

ITVWho?

ITV2 is the the sixth most popular channel on digital terrestrial television and popular amongst former ITV Digital subscribers.

However with former subscribers being asked to either stump up or return their boxes, there could easily have been a situation where a large number of people turned their back on digital terrestrial television, and gone back to analogue.

Although no one actually knows how many people would have refused to pay the £40, and just not replaced their set top box, it was a potential threat - and one cured for a few million pounds.

And what about that price?

There's one more thing to note. Granada and Carlton paid £3million for all the set top boxes. With around a million boxes out in circulation, that values each box at an amazing £3... A big contrast to the £39.99 former subscribers were being asked to pay.

Liquidators Grant Thornton claimed that this was in line with the amount of money which they expected to raise from the sale or collection of the set top boxes.

Was it even worth it?

This does raise the question of how much Grant Thornton were expecting to raise from the collection of the set top boxes. With some people being prepared to pay up the cash, it means that boxes due for collection would have raised a pitiful amount of cash by the time they'd been collected and sold.

In order to raise £3million pounds, and we assume that after administration costs, £35 is made on the cost of selling a set top box to a former subscriber, a mere 85,000 people would have had to pay up - around 9% of the former subscribers.

According to figures released by Grant Thornton today, only 8,000 people actually payed up (although these customers will now be refunded) - less than 1%, although this doesn't take into account that many people (like myself) didn't even recieve a letter asking for the cash.

Dodgy maths.

The figures do seem to suggest that there were serious viability problems in recalling the set top boxes if all Grant Thornton expected to make was a few million. The cynic may suggest that the liquidators dramatically underestimated how many people would be prepared to pay for their box and that in the end, the whole exercise was completely unviable.

Obviously we may never know if this really was the case, but what does seem sure is that Carlton and Granada have payed very little for some serious goodwill.

And at least I don't have to fork out for a new set top box...

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