TV guarantee over cash for football 'was careless'
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Your support makes all the difference.The former chief executive of ITV Digital admitted in court yesterday that his company had been "careless" to guarantee football league clubs £240m in its initial bid to broadcast live matches.
Stuart Prebble told the High Court that a sentence which said ITV Digital's shareholders would underwrite the fee had been included in the initial bid tabled in June 2000, but had not been properly thought through. He said it was to "entice" the league clubs to sign the contract in the face of stiff competition from the satellite broadcaster BSkyB.
The sentence reads: "Ondigital [ITV Digital's former name] and its shareholders will guarantee all funding to the Football League outlined in this document." It was not included in the final contract signed eight days later.
Charles Flint QC, representing the league, described the phrase as a "parent guarantee". He argued that it committed the two ITV Digital shareholders, the television companies Granada and Carlton, to pay ITV Digital's debts if the company defaulted, in the same way a parent may underwrite a young person's bank loan.
Mr Prebble argued that this was not the intention. But he told Mr Justice Langley that the sentence should not have been included in the document. "In the light of what has followed it was certainly unfortunate," he said.
Granada and Carlton are being sued by the Football League after the high profile collapse of ITV Digital in April with debts of more than £1bn.
The league claims it is owed £132m from the final £315m three-year deal. It claims £178.5m is owed for the remaining two years of the contract less a proportion of the £95m paid by BSkyB to pick up the contract over four years.
Carlton and Granada argue that the initial bid was "subject to contract" – any guarantee would have to be included in the final contract to remain valid. An initial short form contract in which ITV Digital pledged to pay £315m over three years did not include the guarantee sentence.
In December Carlton and Granada refused to include guarantees in a longer term, more detailed contract. The company went bust before this contract was signed. The hearing continues next week.
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