Carlton Communications Plc and Granada plc today announced proposals for a new partnership to align ITV and ONdigital – creating an integrated free-to-air, pay television and online media business.

Highlights

Harnessing one of the most powerful brands in the UK, the new ITV will include ITV, ITV2, a new ITV Sport Channel to launch in August, ONdigital, which will be renamed ITV Digital and ITV.com, which launches later this year.

Aligning Carlton and Granada’s ITV assets will allow more effective management and is expected to yield total cost efficiencies for the two companies together of £20m per annum in the second full year.

Stuart Prebble will be appointed Chief Executive of ITV with overall responsibility for ITV free-to-air and pay channels and ITV.com.

Rob Fyfe will be appointed Managing Director of ITV Digital.

David Liddiment will continue to be ITV Director of Programmes and, as ITV Director of Channels, will assume wider editorial responsibility for ITV digital channels.

Charles Allen, Chairman of Granada plc, said:
‘This is the most fundamental change in British broadcasting since the launch of multi-channel television. Granada and Carlton have forged a new partnership in ITV, the UK’s most popular television channel, and are now bringing together the tremendous brand strength of ITV with the UK’s digital terrestrial broadcasting platform.’

Michael Green, Chairman of Carlton Communications Plc, said:
‘ITV will now leapfrog the BBC and Sky with this new partnership. A combined free-to-air and pay television audience of 50 million viewers a week offered entertainment, the Internet and e-commerce is a world first.’

New ITV Structure
Under these proposals, ITV will operate three businesses – ITV Channels, ITV Digital and ITV.com, supported by common service functions.

ITV Channels
ITV Channels will encompass ITV and ITV’s digital channels. A new premium pay sports channel, ITV Sport Channel, will launch in August. It will combine ITV and ONdigital sports rights, including 330 football matches, of which more than 150 will be live. It will have UEFA Champions League, Nationwide Football League and Worthington Cup games as well as linking to 40 live Premier League matches and ATP tennis. ITV will continue to offer the best free-to-air sport and entertainment content.

ITV Digital
ONdigital will be re-branded ITV Digital and become ITV’s pay television platform, leveraging the strength of the ITV brand. Having achieved 1 million subscribers faster than any comparable platform, ONdigital announced today that it added a net 75,000 subscribers in the quarter to 31st March 2001, giving it a total subscriber base of 1.087 million. Its current churn rate of 22 per cent per annum is lower than all other pay television operators at an equivalent point from launch.

ITV Digital’s strategy is to improve consumer loyalty, increase revenue per subscriber and reduce acquisition costs. This strategy will be delivered through:

Rapidly improving geographic coverage, which will reach 70 per cent of the UK within the next three months. Coverage will be further enhanced by the announcement this week that the government will facilitate improvements to the quality of digital reception by doubling the power of the signal strength, initially at 8 of the key transmitters serving many of the major urban areas; and

Enhancing content with additional services, including a compelling sports offering as the launch of the ITV Sport Channel adds to the channel line-up and new pay per view and interactive services are introduced.

This will enable ITV Digital to build a loyal and established customer base as the business continues to grow towards planned break-even in 2003/4 with 1.7 million subscribers.

ITV.com
ITV.com will create a unified online home for all ITV entertainment and interactivity. It will integrate itv.co.uk, as well as Granada and Carlton’s ITV online properties, such as Coronationstreet.co.uk, Emmerdale.co.uk and Crossroadshotel.co.uk. Taken together, these existing Carlton and Granada services already generate over 20 million page impressions per month and will create one of the UK’s top ten entertainment sites.

ITV.com will also feature online properties like Who Wants to be a Millionaire? games for solo and multiple players, national tournaments and synchronised ‘live’ games. Who Wants to be a Millionaire? online has achieved some 45 million page impressions in the first three weeks since launch.

Online events, celebrity chats, audio and video streaming, listings information, e-mail, SMS messaging, chat rooms, consumer polls and a search facility are also planned as part of ITV.com. Through an enhanced range of information, entertainment and interactive services, extensive cross promotion and with access to almost 50 million viewers, ITV.com expects to become one of the UK’s overall top ten favourite sites.

Commenting on today’s announcement, Gerry Murphy, Chief Executive of Carlton Communications, said:
‘This will give more choice to consumers, allow more creative opportunities for producers, and provide better value for advertisers – the potential here is huge.’

Steve Morrison, Chief Executive of Granada plc, said:
‘This agreement will fuel the growth and evolution of ITV and unlock the full potential of our assets in the digital age. ITV’s strong content brands, like Coronation Street, Popstars, Survivor and Who Wants to be a Millionaire? will be exploited across all distribution channels, making ITV the home of entertainment for everyone, everywhere.’

Stuart Prebble, Chief Executive of ITV, said:
‘This is great news for viewers, advertisers and for the future of digital television in the UK. ITV will continue to offer viewers the best free-to-air sport and entertainment and now a clear and trusted brand to lead them to the digital and online world.

‘For advertisers, ITV channels will offer more commercial impacts and greater opportunities to buy advertising and sponsorship packages across free-to-air, pay and online platforms.

‘I’m delighted to have the opportunity to lead ITV, one of the UK’s most powerful consumer brands, at the most exciting time in its development.’

For further information please contact:

Granada:
020 7620 1620
Charles Allen, Chairman
Steve Morrison, Chief Executive

Carlton Communications
020 7663 6363
Michael Green, Chairman
Gerry Murphy, Chief Executive
Shaun Williams, Director of Corporate Affairs

ITV
Stuart Prebble, Chief Executive
020 7819 8000
Nicola Howson, Director of Corporate Affairs
020 7843 8091

ONdigital
020 7819 8000
Rob Fyfe, Managing Director
Jessica Mann, Director of Corporate Communications