Secret Merger Talks Between BBC and Channel 4 Verge on Collapse

19 January 2009

LONDON: The BBC is on the brink of quitting secret merger talks with smaller state-owned rival Channel 4. The BBC cites as its reasons that such a deal would not only "destroy value" but also breach European law.

This rationale calls to mind the 17th-century English churchman and poet Henry Aldrich who pointed out that we make up our minds first, and find 'reasons' later – an insight memorably encapsulated in his verse 'Reasons for Drinking' …

'If all be true that I do think
There are five reasons we should drink:
Good wine – a friend – or being dry,
Or lest we should be by and by.
Or any other reason why.' 
Aldrich's poesy summarises the views of informed observers, who believe such a merger was a non-starter from day one, at least so far as the BBC was concerned. 

Such reluctance would certainly explain the otherwise inexplicable suggestion by BBC director-general Mark Thompson who, writing in the Financial Times on January 12, mooted a merger between C4 and Five, a unit of Bertelsmann's RTL Group

It now seems likely this was a Thompson decoy, floated in the hope of diverting a merger between C4 and the BBC's commercial arm BBC Worldwide.  

Such a union was formally proposed by C4 ceo Andy Duncan (a former director of marketing and communications at the BBC) in December after reports that government ministers and regulators were receptive to the idea.

Given that the BBC is reliant on keeping its political masters sweetened, it had little choice but to negotiate with C4.

However, merger talks stalled in their preliminary stages, reportedly because the BBC was unwilling to include Worldwide's lucrative overseas business in any deal. 

Reportedly, Duncan then proposed that a merged entity should include only Worldwide's UK businesses – a basket of assets that include the Radio Times and other top-selling magazines, commercial production businesses and fifty per cent of the UKTV family of pay-channels.

A pull-out by the BBC, if confirmed, will mire the smaller broadcaster in deep fiscal doo-doo.

Meantime, as the Siamese twins of ratings and ad revenues continue to decline, C4 is teetering on the brink of a financial abyss with a projected revenue shortfall of about £100 million annually over the next decade – based on its present content mix of populist pap and serious programming.

Data sourced from BBC Online (UK); additional content by WARC staff