ITV to Bid for UK Rival?

04 March 2004

British TV giant ITV has reportedly vowed to gatecrash any attempt by smaller rivals Channel 4 and Five to merge.

Last week it was revealed that talks between C4 and Five had progressed from a proposed pooling of airtime sales operations to a full-blown merger [WAMN: 01-Mar-04]. However, the issue is complicated because C4 is state-owned and cannot currently be sold, meaning a deal would require a green light from the government of the day.

Should the station gain this approval, ITV believes the way would be open for a counterbid. "There's no way [Chancellor of the Exchequer] Gordon Brown would allow some sort of cosy deal with Five," said a senior insider at the TV group. "If it's up for grabs, there would have to be an orderly auction and we should be allowed to bid -- and for that matter anyone else."

This view was supported by the Department of Culture, Media and Sport, which commented: "[The barrier to takeover] would be removed for everyone, unless at the same time an additional restriction barring ITV bidding for Channel 4 was laid down."

That said, the combining of ITV with C4 would be fraught with difficulties. Following the recent merger of its two leading shareholders, Granada and Carlton Communications, ITV now controls over 50% of the TV advertising market. It had enough difficulty getting regulatory approval for that deal, so adding C4's 20% share would be far from easy.

However, many believe the chances of any deal involving C4 are slim. Indeed, ITV's chief executive Charles Allen has publicly stated a merger of the station with Five is "not going to happen".

Nevertheless, Allen welcomed the speculation. "What it does," he said, "is open up the whole issue of what Channel 4 stands for, and that would be useful in the whole public service broadcasting debate."

• Separately, ITV announced that its ad revenues are set to rise 1% in the first quarter of 2004. The news came as the broadcaster posted pro forma 2003 earnings (before tax, interest and goodwill) of £222 million ($407m; €334m).

Data sourced from: multiple sources; additional content by WARC staff