Digital row threatens Pace drive

THE near-collapse of ITV Digital has cast a shadow over plans by Pace Micro Technology for UK sales of its latest TV device.

Pace depends on ITV Digital for only two% of its revenue, but is now launching a low-cost set-top box whose fortunes could be severely damaged by the drama at ITV.

The Pace adaptor is a basic digital box costing £99.99 that will allow viewers access to all the free digital channels such as the BBC's News 24, BBC Choice and ITV2, but not to pay-TV channels.

Sales began at a handful of stores last week, but this weekend the boxes will be on sale at High Street stores such as Dixons, Comet and Currys.

Pace, headed by chief executive Malcolm Miller, sold 2.75 million of its various set-top boxes worldwide in 2001. The company believes the new box will add a further 400,000 sales in Britain in the coming year. But with digital terrestrial TV suffering a bad press, analysts believe the target is too ambitious.

James Healey, analyst at investment bank Dresdner Kleinwort Wasserstein, said: 'This is not great timing. I don't believe they are going to hit their target.'

Andrew Wallace, Pace's marketing director, said the company had asked the Government to subsidise its new boxes to help steer viewers to digital TV, but the request had been refused.

Carlton and Granada, joint owners of ITV Digital, which is now in administration, have turned down pleas by the Football League to negotiate on the £178 million it is owed by the media giants. League chief executive David Burns said: 'They refuse to talk to us and they refer us to the administrator. We are at total stalemate.'