ITV launch legal action against STV

STV is to be taken to court by ITV plc – which owns most of the ITV network – over alleged outstanding bills relating to the making of programmes, which STV has opted out from broadcasting.

Strained relations between STV and ITC plc took on an extra twist yesterday, when the latter said it was to pursue the Glasgow-based company for a gross £38 million – estimated to be a net £15 million – £20 million, when STV invoices at ITV plc are taken into account.

Says ITV plc, STV “is attempting retrospectively to opt out of an increasing number of peaktime programmes which contravenes existing agreements”.

Recently, STV has been opting out of the network on a Thursday at 9pm.

While the rest of the network has been showing The Bill, STV has been showing locally-made programmes, such as the current Scotland Revealed, a High Definition documentary of Scotland from the air – which, on Thursday, outperformed the ITV network for share of its available audience.

Another regular opt-out has been on a Sunday evening. Instead of a new series of Miss Marple or, three days ago, Doc Martin, STV has been screening various movies. On Sunday, while Doc Martin pulled in 30 per cent of its available audience, The Pianist, on STV, had a 12 per cent share.

In a statement yesterday, ITV plc said: “ITV plc regrets to announce that it is today issuing legal proceedings against STV to recover a gross debt of £38 million. This debt has accumulated as a result of STV not honouring its contractual contributions towards the Network Programme Budget.

“STV is attempting retrospectively to opt out of an increasing number of peaktime programmes which contravenes existing agreements. The company is also wrongly attempting to claim a rebate against programmes which have been ‘written off’ [programmes that have been made, but for some reason, never shown, believed to be going back as far as a decade]. We are currently withholding monies from STV against this debt and currently believe the net debt is approximately £15 million to £20 million.

“We have been attempting to resolve this matter for more than a year but unfortunately our efforts have been unsuccessful. Given that we are a commercial organisation, with responsibilities to our shareholders, we are left with no option but to take legal action to recover this sizeable debt.”

In response, at around 4pm, STV said: “STV and ITV have been in discussions for many months on numerous matters, of which this is just one. STV has not yet been served with any claim and is disappointed that ITV has acted in this pre-emptive manner.

“STV will vigorously defend its position and in particular its rights as the licence holder to control its schedule and opt-out of programming in accordance with the Devolution Contract and the relevant Networking Arrangements.”

It seems a simple question for any court to answer: Does the wording of the relevant contract or contracts between ITV and STV allow for the latter to opt out and, insodoing, save itself its share of the cost of making the programme it has decided not to show?

And STV has its own ‘beef’ with ITV plc. It reckons ITV plc owes it money for ads ITV plc has sourced and which have been screened on STV.

Its statement continues: “This [opting out] is but one of a number of issues between STV and ITV, one of which is a claim against ITV relating to revenues which STV should have received under its Advertising Sales Agreement.

“Since early 2008, ITV has prevented STV’s independent auditor, Deloitte, from carrying out a full review of all revenue-related contracts, which STV has the right to do.

“However, on the five per cent of revenues which Deloitte has been able to review, a potential shortfall of approximately £2 million (covering only 30 months of a six-year period) was identified. STV will be pursuing this and further claims.”

Last week, STV chief executive, Rob Woodward, unveiled his “vision” to opt out of the ITV1 network 6.30pm evening news bulletin to create a new, 6pm Scottish news hour, in collaboration with ITN. Also last week, STV viewers had to watch Liverpool play in football’s Champions League rather than Scottish club, Rangers, because of the screening deal struck by ITV with the competition’s organisers.

STV’s share price fell yesterday by 11 per cent, to 88.5p – valuing the company at around £36 million.