QC makes a monkey of Digital claim.
The claim by Carlton and Granada that they gave no guarantee to cover the debts of their nowdefunct joint venture ITV Digital was attacked in court by the Football League yesterday as 'completely implausible'.
Charles Flint QC, for the league, which is suing the media giants for pounds 178.5 million, said the managements of ITV Digital and its two shareholder parent companies had been 'desperate' to secure broadcasting rights to Division 1, 2 and 3 matches and were 'prepared to make any offer to achieve that end'.
'This company was completely dependent throughout on its shareholders' support,' he told Mr Justice Langley in the High Court in London.
'Now that the business of ITV Digital has proved to be such a disaster, it suits the directors of Carlton and Granada to distance themselves from its management.'
The league claims that Carlton Communications and Granada Media are liable for money still owed to Nationwide League clubs under a broadcasting contract signed in June 2000.
Carlton and Granada are seeking a court declaration that they are not liable under the contract. The league is also preparing a pounds 500 million claim against the whole ITV network.
The lawsuits are being pursued despite a new pounds 95 million deal signed earlier this month between the league and BSkyB.
League officials say the new deal does not affect its rights under the contract with ITV Digital.
The court action hinges on whether Carlton and Granada are liable for the remaining two years of the pounds 315 million deal agreed by ITV Digital, which went into administration in April after failing to attract enough subscribers. At one point in his argument, Mr Flint drew the judge's attention to a document bearing a pic-ture of the monkey mascot adopted by ITV Digital.
'What is the relevance of that, Mr Flint?' asked the Commercial Court judge.
To laughter, Mr Flint replied: 'It was perhaps an appropriate mascot for a company which we say had no independent existence and simply did what it was told by its shareholders.'
He said the decision to bid pounds 315 million for broadcasting rights was made by the chairmen of Carlton and Granada - Michael Green and Charles Allen - and their main directors, having satisfied themselves it was economically justifiable.
But throughout, ITV Digital was wholly dependent on the continuing financial support of the two shareholders to meet sums due under the contract - otherwise it would have been 'hopelessly insolvent'.
When Carlton and Granada withdrew that support last March, the company collapsed because it could not meet further payments under the contract. 'They declined to honour their commitment as guarantors, although until early this year they had each consistently stated publicly that they would continue to fund the company and pay its debts,' said Mr Flint.
The consequences were very serious for league clubs, many of whom had entered into long-term commitments on the basis of the money guaranteed under the contract.
Mr Flint said Carlton and Granada argued that, although a statement of guaranteed funding was made during negotiations, it was subject to contract and did not constitute an enforceable guarantee.
They also argued that the statement contained in the bid document was not made with their authority, and that in any event, now that the contract had been terminated, any liability they may have had was terminated with it.
But the league contended that at least an implied authority was given to the directors of ITV Digital to do whatever was necessary to obtain the broadcasting rights, which were vital to the success of the joint venture.
The argument by Carlton and Granada that they did not control ITV Digital but nominated directors to an independent management team was 'fanciful'.
Lord Grabiner QC, for Carlton and Granada, said the league's case was 'nonsense' and bound to fail.
The case continues.
Keith Harris (left) chairman of the Football League, and Football League chief executive David Burns arrive at the High Court
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|Publication:||The Birmingham Post (England)|
|Date:||Jul 26, 2002|
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