BROADCASTING: A Government plan to introduce digital television may have to be scrapped because the sole bidder for a licence to operate the service has not yet secured a principal financial backer.
The collapse of the project, which formed a central part of the Broadcasting Act, would be a major disappointment for the Minister for Arts, Heritage, Gaeltacht and the Islands, Ms De Valera.
It would also significantly reduce the value of RTÉ's transmission network, which is currently being sold by the broadcaster's financial advisers, Rothschilds.
Government advisers are analysing a sole bid for the licence, which was submitted by ItsTV.
The licence would enable a successful bidder to market and operate a new television and communications service, based on digital terrestrial technology, offering up to 30 television channels and a high-speed internet service.
It would do away with the need for rooftop aerials, cable connections or a satellite dish.
But The Irish Times has learned ItsTV, headed by former RTÉ executive Mr Peter Brannigan, has been told by Government advisers it will not be awarded a licence until it secures additional finance.
This is likely to result in a delay in the competition process for at least a month and could result in failure to award the licence.
A spokesman for Ms De Valera said last night the Government had not been informed of any change in the competition process by advisers. But sources with knowledge of ItsTV's bid confirmed it has so far only received seed funding from Irish-based venture capital group Delta Partners.
It is understood ItsTV is in discussions with at least two potential international investors but there is no guarantee that its overtures for finance will be successful. The difficult economic climate faced by technology companies is undermining the firm's attempts to raise cash from investors.
Meanwhile, increasing competition from satellite provider Sky and cable firms is reducing the number of potential subscribers available to a new service. Stringent roll-out conditions requiring nationwide coverage for an Irish service from any successful bidder may also be deterring potential investors.
It is estimated ItsTV would need to raise up to €108 million (£85 million) to operate a viable television service in the Republic under the licence.
The funding would be used to buy programme content, advertise the service and pay the network company to broadcast the service.
The difficulties encountered by ItsTV will also affect RTÉ's ongoing process to sell a 72 per cent stake its national transmission network.
The proposed new digital television service would be the largest customer of the network.
Industry sources believe failure to set up a national digital television service would reduce the value of RTÉ's network to €25.5 million, from current estimates of €76 million.
A failure to award a licence for a national digital television service would also embarrass Ms De Valera, who is responsible for the project. It was delayed for at least a year due to serious disagreements over the terms of the Broadcasting Bill.
Industry experts believe the delay could prove fatal to the project because of the major inroads made by Sky in the Irish market.
