British TV Channels Four and Five Mull Merger

01 March 2004

Mutterings, first detected on the media radar in early February, of an impending marriage between British national TV broadcasters Channel 4 and Five were unexpectedly confirmed late last week.

According to a report Friday in national newspaper The Guardian, Channel 4 chief executive Mark Thompson confirmed that formal talks had begun after approval by his board to appoint specialist financial advisors.

Discussions between the two broadcasters initially focused on the feasibility of creating a joint sales organization in defence against newly merged ITV (currently controlling over 50% of Britain's TV advertising market). At some point, however, the dialogue broadened into discussion of the benefits of full-scale marriage.

Top level talks between the broadcasters have involved C4's Thompson and Five's two shareholders, Bertelsmann-owned European giant RTL Group (owning 75% of Five's equity) and Lord Clive Hollick, chairman of United Business Media (35%).

The route to merger could prove tortuous since C4 is a publicly owned corporation created by Act of Parliament in 1982. Although to all intents and purposes government-owned, the channel differs from the BBC in that it receives no public funding and depends entirely on its commercial activities

Approval of a merger will, as usual, be required from the board and shareholders of each company. But C4's sole shareholder is the government of the day, and its board is appointed by the secretary for culture, media and sport in concert with media regulator Ofcom.

Given Friday's announcement that financial advisors are to be appointed, there can be no doubt that C4's Thomas has already received approval in principle to explore a merger. A sale -- which could realise around £2 billion ($3.70bn; €2.98bn) -- would require parliamentary assent.

One option on the table is to meld the administrative, sales and operational functions of the two businesses, while running discrete programme schedules, along similar lines to [and challenging?] BBC1 and BBC2.

Data sourced from multiple origins; additional content by WARC staff