BBC in talks to bail out ITV Digital

The BBC is in talks with ITV Digital over plans to save the ailing pay-TV provider.

ITV Digital's future has been thrown into doubts over its massive debts and by concerns that shareholders in parent companies Granada and Carlton are growing impatient with the loss-making venture.

The BBC has now stepped in to discuss a restructuring of the ITV Digital offering amid its own concerns that the demise of ITV Digital would leave the digital broadcasting market in the hands of Rupert Murdoch's BSkyB and US-backed cable providers NTL and Telewest.

The BBC's plans involve the sale of set-top boxes for around £100, where ITV Digital currently gives them away free as a loss leader, and the free availability to all customers of around 20 digital channels. ITV Digital currently offers a variety of monthly channel subscriptions.

Users who wanted to use the ITV Digital set-top box to receive premium channels, such as sport or movie channels, would still be able to do so at extra cost.

Granada and Carlton have already invested around £800m in the scheme and their shareholders are concerned over predictions that it will take a further £300m investment before the venture is positioned to break even.

Under the BBC's plans, which would see terrestrial TV providers including Channel Four and potentially Channel 5 pooling programming and operations, the break-even point could be achieved far more cheaply - though the BBC would not be required to make any financial investment in the venture.

The talks are ongoing but according to the Financial Times a conclusion is thought to be just weeks away - assuming existing rival broadcasters do not try to block the venture with any objections.

Tony Blair said earlier this week that the analogue signal used by terrestrial TV broadcasters will be switched off by 2010. Ahead of this time the BBC will doubtless be considering its options for moving over to a digital signal.

The news comes on the same day that NTL and Telewest announced that they are partnering to develop digital television applications.