Is ITV Digital, the former ONdigital, a national treasure? You would think it must be a cultural jewel, for all the agonising about its future from within Whitehall. The government has just a few weeks to decide whether to get involved in a rescue of the "digital terrestrial platform". Its owners, Granada and Carlton, are bound to pull the plug before the end of the year. Their boards can see no way a proper return can be generated from the hundreds of millions of pounds poured into it. It is a miracle that Charles Allen at Granada and Michael Green at Carlton have resisted pressure from their fellow directors and kept it switched on so long. But their share prices are collapsing and their shareholders are imploring them to turn off the juice. The only question in my mind is whether the rate at which their advertising revenues are falling means they will have to take evasive action even sooner than they contemplate.
Anyway, whether by fair competition or foul, Sky has established an insuperable market lead over ITV Digital. Murdoch's advantage is so great that there is little chance of reducing his lead, even if an Office of Fair Trading review into Sky's exploitation of market power were to come up with draconian remedies.
It is all a bit embarrassing for the government, which was hoping for ITV Digital to take multichannel television - and even potentially the internet - to the digitally excluded masses.
You cannot have forgotten Tony Blair's grand hopes of building e-Britain among the satanic television masts. ITV Digital was a vital building block because it could reach parts of Britain that Murdoch and the cable companies could not.
ITV Digital's demise would also see the Chancellor in mourning. He wants to auction an important piece of dematerialised real estate, viz, the analogue broadcasting spectrum. But he can only get his paws on it if most of the country has gone digital, so that analogue broadcasting can be terminated without ruining the lives of too many technophobes.
That said, the Department for Culture, Media and Sport has not quite given up. It is off to Europe to ask permission for a suspension of single-market rules so that the sale of analogue televisions can be banned in the UK. Ministers have belatedly worked out that they will never be able to wean enough people off analogue TV if "old"-technology televisions are retailing in Tesco for a fraction of the price of a digital set. It is a wonderful notion that the £50 television sought by every 13-year-old could become contraband. But even if the European Commission agrees, which looks unlikely to me, it is naive to think that any prohibition could come fast enough to save ITV Digital.
The more germane question for the government is whether the digital terrestrial platform - as opposed to the channels broadcasting on it - offers vital competition to Sky and should therefore be protected. Under consideration are three possible rescues: 1) Sky is allowed to acquire it and it becomes Sky-lite; 2) it becomes a free-to-air network under the ownership of the BBC; 3) ownership passes to the state, but is managed under contract by the BBC (as a free-to-air network). None of these is particularly compelling. The argument for extending Sky's reach, when it is already the dominant, price-setting digital network, is weak. And the evidence suggests shortcomings in the BBC's ability to attract an audience to existing digital channels. Handing the platform to the corporation would be taking a lot on trust.
There would be little to lament if the whole adventure was scrubbed out as a failure. This earthbound, all-quacking lame duck probably deserves to be put out of its misery.
The great thing about America, as the head of Interactive Wart Creme told me over lunch, is that it is so cheap and easy to sack people. The US economy may be heading into recession, but I-Wart's profits will hold up fairly well. Why? Well, last year it bought up many of its rivals (National Wart, Utah Wart et al) and has identified plenty of "synergies" to exploit. Thus, US overheads will fall as roughly 5,000 people are empowered to seek opportunities outside the group.
Europe is a lot more troubling for I-Wart. It is "just too damn expensive to let people go in Europe", said my host. In Belgium, for example, I-Wart would have to compensate redundant workers with two years' pay. "It is a lot cheaper to keep our Belgian people on through the downturn, which is what we will do." Many of you may be thinking "hooray for the European social model, boo to US hire-and-fire capitalism". So I have been straining to come up with compelling reasons why you would be wrong.
I could dazzle you with statistics about the self-regenerating nature of the US economy. You would marvel at the capacity of US companies to innovate. And you might even give a moment's contemplation to the 1990s mantra that Europe will attract far less job-creating investment than the US if companies such as I-Wart cannot downsize willy-nilly (the argument is not wholly meretricious, even if it has been imbued with almost religious significance by T Blair).
On the other hand, for an indeterminate period, I-Wart and its ilk will not be making any big new investments. In fact, it will be withdrawing capital from the business and most of that will come out of the US. So it is hard not to give two and a half cheers for "eurosclerosis". Those Belgians do not look in such terrible shape to me.
Robert Peston is editorial director of Quest(TM); www.csquest.com; e-mail: rpeston@csquest.com
