ITV Digital split over Sky deal <BR>for sports channel

LONDON - Talks between ITV Digital and BSkyB over carriage of ITV Sport on Sky Digital are being held up because of a rift at the terrestrial broadcaster over whether to do the deal or not.

Opinion is currently divided between ITV Digital shareholders, Carlton Communications and Granada Media, and top executives at the broadcaster.



A group of ITV Digital executives, believed to be led by chief executive Stuart Prebble, are said to be against the deal because they think that by keeping the channel off Sky Digital they may be able to lure some of Sky's subscribers away.



However, most believe that this is misguided, as ITV's decision not to be broadcast on Sky until recently cost the commercial terrestrial channel dearly in terms of lost audience and lost advertising revenues.



The other train of thought says that a carriage deal would give ITV Digital access to a wider audience -- Sky has 5m subscribers -- allowing it to generate more advertising revenue.



Carlton is understood to be on the side of Prebble and his executives, while Granada is understood to be backing a deal.



A deal between ITV Digital and BSkyB is ready to be signed, but it would cost ITV Digital £4m a year, an amount it considers too high. Meanwhile, ITV Digital is understood to have asked Sky for £80m for ITV Sport to become part of the Sky package.



However, BSkyB chief executive Tony Ball is thought not to be feeling too much pressure to do this deal.



One Sky executive told the Financial Times:

"For Sky, a deal would be about added content. But, unfortunately, most of the content [on ITV Sport] is not Champions League but Barnsley."



In the meantime, Carlton and Granada are coming under increasing pressure from shareholders to axe ITV Sport, which could save them as much as £130m a year for the next three years, according to estimates from Mathew Horsman at Investec Henderson Crosthwaite.



However, closing the channel could also result in compensation payments to Nationwide League clubs.



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