Survey of main institutional investors shows 25 per cent in favour of abandoning pay-TV platform
Granada Media is facing growing pressure from some of its most significant shareholders to abandon or sell-off its pay-TV operation ONdigital, writes Dominic Timms.

Against a backdrop of deteriorating TV ad revenues, a slip in the time scale to breakeven and evidence of a slow down in subscriber growth, shareholders surveyed by the Financial Times said the terrestrial platform was failing to compete with rival BSkyB and should be shut down.

At least four large shareholders in Granada are in favour of a speedy exit form the pay-tv business which has already cost£800 million. At least a further£300million will have to be ploughed in before ONdigital reaches its new breakeven target of 1.7 million subscribers, predicted in 2003.

The paper said all investors it contacted were pessimistic about the business, which has struggled to match rival BSkyB's subscriber growth rates.

'Sky was always going to win the pay-TV war, it was just a question of when. The time is coming when ONdigital is going to have to accept defeat,' said one fund manager.

The spectre of ONdigital folding is reminiscent of the demise of British Satellite Broadcasting, the direct-to-home analogue TV service which launched in 1990, failed to take off and was then rapidly merged with Sky's analogue service to create British Sky Broadcasting.

This time around however the prospect of the pay-TV platform's imminent collapse is unlikely, especially if the government wants to meet its 2006-2010 timetable for the switch-off of the analogue TV signal. Without ONdigital it would be unlikely to meet its pre-switch-off target of 95 per cent of the UK having access to digital TV and thus would be unable to start an expected lucrative auction of the analogue spectrum.