Where's the money?

Posted on 21 January 2003 in Television (No comments)

Just when you thought my ramblings about ITV Digital might have come to an end, the Media Guardian website today revealed the reasons behind the decision by Carlton and Granada to buy nearly a million set top boxes and give them to former subscribers.

As well as helping to protect ITV2, there is a much bigger cash incentive for the two companies - up to £11.8million.

Every year the ITV companies pay a set amount of money to the Treasury for their license to broadcast. However as an incentive to see people move to digital, the Treasury gives the broadcasters a rebate. The more peope who go to digital, the more cash the ITV companies get reduced off their bills. In the year to the end of September 2002, Carlton and Granada received £84m between them.

The 1 million former ITV Digital subscribers made up roughly 14% of all digital homes - meaning that if every ITV Digital subscriber sent their box back and didn't replace it with any other digital service, that reduction (known as the digital dividend) would be reduced by around £11.8m.

Of course not everyone would have turned their back on digital. Some estimates believe around 300,000 people moved to satellite or cable when ITV Digital closed. Which would still have left a lot of people who could potentially have cost the two companies money.

When it comes down to paying no cash and taking a risk, or paying a little cash (and let's face it, the £2.8m paid is a piddling amount for Carlton and Granada) and taking no risk, it was a price no doubt worth paying for the financial benefits over the next few years.

It's obviously nicer to think of it as a goodwill gesture to those who have lost money and been inconvienced by the whole disastor that was ITV Digital, but goodwill doesn't seem to have been much a concern to ITV Digital's parent companies so far, so why start now?

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