Opinion is hardening in the City against the sports-led strategy of the listed UK commercial television companies Carlton and Granada, the backers of ITV Digital, ITV1 and the ITV Sports Channel.
A rash of negative notes have focussed not only on the advertising slump and costs related to setting up a digital platform, but on the high cost of acquiring soccer rights.
A recent Goldman Sachs note asserted that three things might help the broadcasters, one of which “ would be the closure of ITV Sports, if not ITV Digital as well”.
Moreover, according to an analyst from another major investment house the £160million ($234m/B259m) per annum paid by ITV Sports for the Nationwide League, Worthington Cup and Champions League matches represented “a significant capital risk with no guarantee of a return.“
The analyst added: “ITV Digital needs 2 million subscribers to break even but I’d be very surprised if Nationwide soccer was giving any value to ITV Sports. It’s a pure cost going forward. Analysts can’t agree whether ITV Digital is a platform or a content group.”
On the free-TV front, Goldman Sachs was more positive in June about the effect of the £60 million ($87m/B97m) per annum Saturday evening Premiership highlights show and likely World Cup rights on the ITV schedule.
But just three months later analysts are now doubtful that soccer will keep ratings steady in the weak ad market. “The Premiership (highlights show) is getting lower ratings than the light entertainment format, like Blind Date, which cost less, “ said the City analyst.
While it is likely that Carlton and Granada will remain steadfast in their support of the ITV Sports Channel and The Premiership highlights show, analysts predict that in the face of investor disenchantment, the companies may well have to reassess their strategy.
