Football Bubble: The Crash of ITV Digital

Live televised football in Britain was introduced
tentatively. The FA Cup final had been broadcast live since 1953, but leagues games only began
to be broadcast regularly in the 1983-84 seasons, with experimental transmissions on ITV the
occasional Friday evening. The number of matches were restricted for two reasons: firstly,
in response to the game’s fears that over-exposure would reduce attendances and, secondly, because
of the broadcaster’s need to schedule matches for peak audiences. Nevertheless, it began a quick rise in the
value of televised football. While that first, two-year contract was acquired for £5.2m,
within five years a broadcaster would pay roughly £11m/season for exclusivity – and
It’s important to understand how those rights are calculated. They’re split geographically, with a valuation
determined by – 1 – the size and purchasing power in the viewing market – 2 – the popularity
of the sport among the general audience and – 3 – by the level of competition in the
supply side. There were two key reasons for that first,
1980s boom. Firstly, the relationship between television and football was symbiotic; football
benefitted from increased exposure leading to increased commercial opportunities, while
television benefitted from having organic entertainment with few production costs. Secondly, while football had originally been
vending its rights packages in a marketplace occupied by two inhabitants, the BBC and ITV,
the introduction and growth of pay-television in the UK brought competition between broadcasters,
driving the price of English football’s content up. From 1983 to 1986, the BBC and ITV were the
sole broadcasters of football in the UK. In 1988, however, British Satellite Broadcasting
(BSB) introduced itself as a competitor, promising a more lucrative offer. As a result, a round
of competitive negotiations were held, with ITV securing an exclusive four-year deal at
a cost of £44m. In 1990, BSB merged with the similarly ambitious pay-TV company Sky
Television plc to form British Sky Broadcasting (BSkyB) and, In 1992, Sky bought the exclusive
live rights to the newly formed Premier League for £191 million, while the BBC reacquired
the rights for recorded highlights – to be shown on Match of the Day – outbidding ITV
by £49 million. The football-media relationship in the UK
was budding and starting to show that it could be a big money business; Sky’s second Premier
League deal in 1997 (which ran for four years) cost £670 million, over three and half times
more than their previous deal. In relative terms, however, certainly in comparison
to the most recent, £5.1b broadcasting contract, the cost of the rights packages remained relatively
low, sign-posting investors towards the market, and encouraging them to take risks for the
potential of substantial rewards. In 1998, a pay-TV service named OnDigital
was launched. The project was jointly owned by Carlton Communications and Granada plc,
two franchises of the ITV network. Their targets were to be the primary competitors to Rupert
Murdoch’s Sky Digital and to have 2 million subscribers by 2003. The plan, however, did
not get off to the best start. Sky’s aggressive marketing made OnDigital
look unattractive, with the former acquiring 350,000 subscribers by April 1999, while the
latter dragged behind with just 110,000. Later, Carlton and Granada would reveal that one
in four subscribers quit the service within the first three months, slowing OnDigital’s
growth to a snail’s pace. Going toe-to-toe with Sky was always going to be war of attrition
and while both companies started to offer their boxes and satellite dishes for free
in an attempt to undercut the other, Sky were better built to absorb those losses, thanks
to a history of profits and a larger existing customer base. OnDigital attempted to play their one ‘trump’
card, attaching itself to the ITV brand (acclaimed as “the most powerful in British commercial
television” by executives) in an effort to drag itself – under the new identity “ITV
Digital” – towards profitability. In further attempts to mimic Sky’s business model,
ITV Digital decided to muscle in on the growing football industry while it was still relatively
cheap. In 2000, they paid an astronomical £315 million
for exclusive rights to the Football League (Championship, League One, League Two and
the Worthington [Now Carabao] Cup), grossly overestimating the value of the content. Expectations
that the company could keep up with Sky’s metrics through showing the muddy-kneed
Football League in direct contrast to the more glamourous Premier League were deeply
flawed; by October 2001 ITV Digital had just 1.3 million subscribers compared to Sky’s
5.7 million. In fact, during the 2001/2 season, there were reportedly matches during which
ITV Digital’s audience barely exceeded the official attendance total. By 2002, rumours emerged that ITV Digital
were losing £1 million a day. Behind closed doors, the company reportedly held desperate
talks with the Football League to renegotiate the £315 million deal. ITV Digital were bleeding
hundreds of subscribers to Sky on a daily basis and, in a last effort to save the project,
tried to negotiate a £130 million cut to their TV rights deal. The Football League, now increasingly concerned
by the situation, rejected the negotiation on the basis that many of their clubs had
already offered contracts to players based on the expected shared income of £105m per
season. In March 2002, ITV Digital was placed into
administration. By October, the company was liquidated. Sky, ever the opportunists, picked
up the Football League rights from 2002 to 2006 for £95 million, a snip in comparison
to what ITV Digital paid. The knock-on effects were seismic and continue to be felt today. The collapse left £178.5 million owed to
Football League clubs at a time when loss-making in English football was already chronic. Furthermore,
Sky’s deal saw the Football League clubs make £75 million less a season than they
had anticipated. Between 1992 and 2014, 58 clubs underwent
insolvency proceedings at an average of 2.63 a year. In 2002 and 2003 alone, 16 clubs entered
administration. [2002: Barnsley, Bradford City, Bury, Carlisle United, Halifax Town,
Leicester City, Lincoln City, Notts County, Swindon
Town, York City. 2003: Darlington, Huddersfield Town, Ipswich Town, Luton Town, Oldham Athletic,
Wimbledon.] In 2012, former Barnsley chairman, John Dennis,
recalled the harrowing experience: “Barnsley were regarded by most of our peers
as a prudently run, sensible football club. In my time as chairman we made a profit in
12 out of 13 years and the exception was the year we went into administration… We were
accused of being profligate for committing money we hadn’t yet received, but I have
no sympathy for that point of view. It was perfectly reasonable to assume the
terms of a properly negotiated contract with a properly constituted company would be honoured…
Within two months of the ITV Digital deal collapsing, so had the transfer market outside
the higher echelons of English football.” If ITV Digital’s business plan was careless,
then the Football League’s were completely negligent. The Football League sued ITV Digital’s
owners, Carlton and Granada, for failing to guarantee the contracted income, but the High
Court’s Mr Justice Langley ruled that ITV Digital’s owners were under no legal obligation
to honour their collapsed subsidiary’s debts. Possibly out of embarrassment and frustration,
the Football League then filed a £150 million negligence claim against its legal firm Edge
Ellison (now known as Hammonds LLP) for failing in its duty to protect the league’s commercial
interests by seeking guarantees during negotiations with ITV Digital. Of the £150 million claimed,
the High Court’s Mr Justice Rimer found only two breaches of duty for
which he awarded just £4, stating that the league knew about the risks. The suit, which
went on for four years, cost approximately £5 million in legal fees. What can be learnt from ITV Digital and its
effect on football clubs? Primarily, that bidding for sports rights
can be particularly risky if overvalued. Perhaps more ominously, ITV Digital’s crash demonstrated
the interdependence between the sport and media industries. If one falls, the other
will face serious repercussions.

100 thoughts on “Football Bubble: The Crash of ITV Digital

  • It's less about ITV Digital's collapse, more about Sky paying more than 3x less for the rights that sent clubs spiralling into administration. Sky has ruined lower league football. BT has somewhat rescued it a little in the last few years.

  • I wrote my dissertation last year on how television broadcasting revenue has created a competitive imbalance in the Premier League and this video would have been sooo helpful! Oh, well. Great video nonetheless!

  • Aside from ITV, Who remembers Goalissimo (channel 4) and football italiano (channel 5) and the bundesliga highlights on ITV 4.

    Now there's NOTHING on freeview, except the odd fa cup match and England qualification games (even the England friendlies have gone to sky now). They won't stop until everything is on sky or bt.

  • I thought the video would cover ITV and its purchase of CL football and then winning highlights for the EPL. but then I suppose this wasn't part of the digital package as such, but I wonder if they over paid for those?

  • When ITV Digital collapse:
    *Brookside still exist
    *Sky sign the EFL Contract
    *16 Clubs was undergo administration
    *Liverpool placed 2nd in the Premier League

  • LUFC fans from Leeds:"I know ITV Digital was dead how about watching EPL on Sky"
    LUFC fans from Oxford:"Yes,because I watch Leeds United matches on Sky Sports"

  • When Amazon get up and running it'll happen again. BT and Sky can't afford to take the hit and will have to pass the increasing cost of live rights to their other, non sports subscribing customers. Amazon will simply absorb the cost as a loss leader in order to get its other Prime services out there.

    Streaming every game every week is the way forward.

  • Thumbs up to ITV Digital. As City weren't in the Premier League then, ITV digital ensured it was still possible to watch some of their games on TV.

  • This definitely hurt my club among many others, it would be interesting to see what the Premier League landscape would be today if the clubs received the money they were promised

  • It's all gonna go wallop soon enough. It will be mostly fan owned clubs after that. But the commercial pressures will still be there.

  • Great video. Maybe do one on how oversees audiences pay next to nothing for prem coverage but UK viewers have to pay through the roof?

  • Football is ridiculously expensive these days that 2 local stations in my country went bankrupt after they acquired the rights of the Premier League matches. When will those dinosaurs on top understand that their approach is going to bring the PL down.

  • Could you do something on the Norwegian youth system. They seem to have a lot of promising young players coming through. Would be interested to know what restructuring etc they did to start producing these players

  • Imagine if there was a streaming platform just like Netflix or Disney+, where you can see online games live hd of the major leagues in football and able to rewatch games of just the ongoing season, watch just the relevant interviews and maybe just stream a recap or football news program each week

  • Company : it's very wrong we demand money hundred and 5 million pounds should be paid to us man.
    Judge: ok ok… So you need money ok.. Judging from all the evidences and facts I rule that the company be paid… Drum roll please…. 4 pounds solved.. Bbye mate have a nice day

  • BT sports killed football off. Miss the good old days when live football was shown live on ITV the champions league games. Now it's just money hungry bastards who rip off the the ordinary working class people.

  • It crashed because everyone got them dodgy boxes and got it for free or near enough free lol. I remember as a kid everyone in my area had one.

  • BSB "merger" with Sky was anything but. Basically Mr Murdoch said "being 'friends' or else". A shotgun marriage in all words.

    BTW, ITV's live matches during the 80s were on Sundays, not Fridays. These were the timeslots for the BBC "Match of the Day *LIVE*"

  • The itv digital service was dreadful. The boxes were slow and had far fewer channels than sky. They were easily hacked and there was loads of fully open viewing cards for sale where I worked. I still would've paid for the sky subscription to avoid using it.

  • Swedish television started broadcasting English league football already in 1969, showing Wolverhampton vs Sunderland. I didn't know that was before matches where televised in the UK!

  • they just got greedy, they refuse 185million pounds only to collect 90million from sky?
    its look like EFL was betting and refused to cash out and then end up getting nothing.
    um that happens to me a lot. but i wouldn't throw 185mill away like that? who were thir accountants, risk analyst and economist? hope they all got sacked!

  • This is the content I signed up for, it didn't originally appear on the athletic so even better. I get that they have good stories and inside info but sometimes your original stuff is more than enough

  • YouTuber Gondarth had On Digital, he mentioned it in a handful of his videos. I remember reading about On Digital when it and Sky Digital first launched, but only Sky Digital was available in our area. Although Cartoon Network was almost all I watched at the time, I still think Sky was the better option all the way. Still, it would've been nice to have the Carlton Kids channel, I hear they had reruns of Rubbish: King of The Jumble, just one of many Citv shows I enjoyed when I was younger! The BBC and ITV really need to release more of their kids back catalog on DVD. The first time I saw ANYTHING from Rainbow was Zippy's Marmite advert in 2002!

  • The codes for on digital were leaked by a hacker who was on sky’s payroll. When the french company who manufactured the cards found out, they attempted to sue Murdoch. Instead they settled outside of court with Murdoch buying shares in the company

  • This was becuase there itv digital boxes where easy to chip so everyone and there granny had a chipped box with all the channels free

  • Great video, but at 4:08 you implied ITV digital used a dish when it actually just used an existing standard analogue TV antenna and a box (this was one of the marketed features over Sky). ITV digital was one of the first digital terrestrial TV networks and when it collapsed the remnants were acquired and remade into the Freeview service by the BBC (which is now the standard for receiving terrestrial TV in the UK). For a long time after ITV Digital went bust the boxes could still be used to watch Freeview service.

  • On digital wasn’t a satellite network they were cable and itv digital priced out sky who wanted to carry the itv sport channels

  • You would think, having the t.v rights to more football clubs, would guarantee success, I'm glad I am not in business!
    If I was running ITV digital, I would see that as a no brainer, more clubs more supporters. I can see why they did it, but I wouldn't have offered £350 million though, not back then.

  • the EFL and negligence… as perfect a pairing fit as Ant and Dec, I will say though that it wasn't just the lower echelons of the transfer market that died, the top level did too for a few years, just ask Leeds United when they tried to sell their top assets other than Rio Ferdinand (thanks Harry Kewell for being a treacherous piece of shit along with the cancer known as your agent/sports agents in general)

  • The fact Carlton or Granada weren't liable is bullshit. The law is fucked if a company setup and backed by the aforementioned can just run off when the deal goes tits up.

  • Would be like the football league to be incompetent, look at the state of some of the efl clubs now. As an organisation they are more interested in punishing them, than helping them

  • I think the fact it was so easy to pirate had a lot to do with their downfall. I knew a lot people that had this service for a small one off payment to a dodgy "technician"

  • EFL sues its legal team thinking it will make them £150 million

    Ends up getting £4 and costs £5 million

    Outstanding move.

  • Sky funded Israeli hackers who broke ITV Digital's encryption and posted the security keys online, facilitating hacked digital boxes. Any time a company had Sky legally dead to rights, Sky would just buy their opponents, to make the case go away!

  • As the saying goes: Don't count your chickens before they are hatched. It's funny how simple folk wisdom could prevent financial catastrophes such as this. Greed tends to switch off the human brain's higher functions.

  • Thats got to be the most stupidest name to call a sports. Just gonna watch football on digital and the other person will go what channel. No wonder it lost money

  • Pausing 29 seconds in and guessing there is no head on dealing with Sky paying for the ITV box to br cracked to eliminate the competition

  • I remember in 1996/97 Sky TV got the rights to broadcast Football League games & it created a huge popularity in the lower leagues. Division 2 & 3 teams could actually buy & sell players without relying on the loan market or out of contract players all the time. By 2000/01 when Sky had it’s last season broadcasting lower league Football it was on such a high that ITV Digital just offered a stupid amount of money as they believed that Lower League Football became more attractive. Which was in essence true but after the collapse Lower League football died. It just wasn’t as good to watch as it once was. 1996-2002 was the golden era of the EFL & they got greedy, plain & simple.

  • Judge: The court finds the defendant guilty for breach of contract. You shall pay the plaintiff 4……. pounds…..

    Defendant: anyone got change? I've only got notes.

  • The other reason ITV Digital failed was pretty much everyone I knew went out and got the free digi-box from Argos etc and then acquired a pirate card which gave you access to all the channels without subscribing.

  • Why are you referring to On Digital "offering their boxes and satellite dishes for free" when one of the key advantages of the service was that it was accessible through an ordinary aerial ?
    Also, Sky had been offering free kit to customers way before On Digital came to market. They did introduce a £99 charge when Sky Digital came to market but that soon dropped off.

  • Ahhhhh the memories of all those ITV Digital Sponsorship Boards being plastered around grounds in 2001/02.
    The overriding memory of seeing a fellow Albion fan carrying a pitch side one out the ground final day of season when we got promoted.

  • Never payed a penny to Sky, BT, Amazon etc. Have I missed anything? Oh apart from a load of millionaires chasing a ball around a field.

  • Let me be the first – ever – to say (and I know this is crazy talk) that ITV should never, EVER be allowed to broadcast football, ever. The aggressive ad breaks should settle it once and for all, but the commentators are shit also, and I despise Mart POOgatch. Please fuck right off forever, ITV, the BBC is the only place to watch football. I literally can't enjoy football on ITV because I know no matter what, there's shit punditry and an offensive amount of ad breaks coming up at half time. And I have to listen to that ridiculous commentator who talks through his nostrils at everyone throughout. I cannot express my hatred of football being shown on ITV enough.

  • British viewers are generally gullible. They pay no matter what in order to be seen as relevant, which is how a company like Sky has been able to be a key market leader. Compare the UK market with any other European country and you’ll notice that the British model doesn’t work elsewhere.

  • At that time I wasn't allowed a sky dish (planning regulations) and cable TV wasn't in my area. I tried to get ITV Digital. The TV reception was no where near good enough. It wasn't just me. Large areas of South Birmingham had similar issues. They got it so wrong. It was another 3 years when I got Freeview which worked fine.

  • Is this guy still making videos?
    I'd have thought after his shambolic 'Manchester United 1974' effort, with his inability to pronouce key players names (as he had obviously never seen them play), the embassrassment would stop further attempts? Sadly not it seems…..

  • Good video, although it has also been alledged by an investigation by the BBC that there were some dirty underhanded tactics that accelerated ONDigital and ITV digital's downfall.

  • I'm more blown away at the fact there was a paid cable subscription service in the 80/90s. I legitimately thought that was a late 90s thing

  • OnDigital/ITV Digital was a Digital Terrestrial service, it wasn't a satellite TV service. Also, NDS (mostly owned by Rupert Murdoch's News Corp, the majority shareholder of Sky) cracked Mediaguard, the encryption system used by OnDigital/ITV Digital, leading to piracy, which consequently accelerated its downfall, so it wasn't just the football rights that killed off the pay-tv service.

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