Granada And Carlton Bring ONdigital Under ITV Brand
Carlton Communications and Granada have today confirmed plans to change the structure of ITV, including a radical overhaul of the jointly-owned digital terrestrial broadcaster, ONdigital.
ITV Digital is the rebranded name for ONdigital. A new sports offering, ITV Sport Channel, will be added to its stable in August, combining ITV and ONdigital sports rights. These include the UEFA Champions League, the Nationwide Football League and the Worthington Cup.
ONdigital grew its subscribers by 75,000 during the first quarter of this year and now has 1.1 million customers in total. The group said today that it aims to break-even in 2003/4 with 1.7 million subscribers, a revised figure on the previous estimate of 2 million for 2002. According to ABN Amro’s analysis of ONdigital’s figures, subscriber growth has been hampered by high churn (see ONdigital Subs Growth Hampered By High Churn).
Prebble will have overall responsibility for all aspects of the ITV business. David Liddiment, currently director of programmes at the Network, will also take on the responsibility of ITV director of channels, including editorial control for the digital channels. Rob Fyfe will be appointed managing director of ITV Digital.
Prebble will also head up ITV.com, set to launch later this year as a “unified online home for ITV entertainment and interactivity”, combining itv.co.uk with sites such as Coronationstreet.co.uk and Emmerdale.co.uk. It will feature the recently-launched Millionaire games and will include chat rooms, online events and SMS Messaging services. ITV’s online efforts so far have been felt to fall somewhat short of the mark (see Insight Analysis: Acquisition Of ITV.com Could See Stronger Web Presence From The Network).
Stuart Prebble said: “This is great news for viewers, advertisers and for the future of digital television in the UK.”
Combining the ITV assets of Carlton and Granada is expected to yield total cost efficiencies of £20 million a year and this figure is expected to rise to £100 million when the two companies finally merge.
ABN Amro broadly welcomed today’s announcements but is concerned by the lack of detail on how the group plans to tackle the high churn rate and high subscriber acquisition costs at ONdigital.
By early afternoon stock in Carlton was down 10p to 403½p, while Granada had dropped 6p to 180p. Again, the high churn at ONdigital (around 22%) and the costs of subsidising free hardware to entice digital customers (around £300 million a year) are likely to be disappointing the market.
