ITV proposes merger with Channel 4 and Five
ITV has reportedly drawn up a plan for a three-way merger with Channel 4 and Five to create one broadcasting giant that would rival the BBC but failed to seek approval from the other two broadcasters involved.
The single commercial broadcaster plan, which is one of several “radical ideas” that ITV has put forward to the government, would save hundreds of millions of pounds by merging back-office functions and cutting jobs, according to reports.
The three main advertiser-funded commercial channels – ITV1, Channel 4 and Five – would become one broadcaster, which ITV claims would allow more investment in programming across the three main terrestrial channels, as well as digital channels such as ITV2, Film4 and Five USA.
However, Channel 4 and Five are thought to be surprised by ITV’s proposals – a Channel 4 spokesperson confirmed that the broadcaster had had no discussions with ITV about a merger and said the idea was unworkable.
Channel 4 is still keen to join forces with BBC Worldwide as a solution to solve its funding deficit, although a merger between Channel 4 and Five still hasn’t been ruled out.
However, ITV believes a merger between all three commercial broadcasters may be the only way to guarantee its survival in the face of the most challenging economic conditions for a generation.
An ITV spokesperson confirmed that the broadcaster has looked at a “number of radical ideas” as part of its response to Lord Carter’s interim Digital Britain report.
If ITV’s proposal went ahead, the new commercial broadcaster would control more than 60% of the British TV advertising market and the government would have to rule out competition law for the merger to take place.
Other commercial broadcasters are expected to be unhappy about the proposals, particularly Rupert Murdoch’s BSkyB, as it would face a powerful new competitor.
One of ITV’s alternative proposal is to turn Channel 4 into a full PSB that would no longer be funded by advertising, on the basis that a significant proportion of C4’s commercial revenue would then flow to ITV.
ITV is currently suffering from a dramatic fall in ad revenue as a result of the economic downturn and is expected to report a huge drop in profits when it releases its annual results for 2008 next week.
Reports suggest that the commercial broadcaster’s revenues have fallen by as much as 20%.
ITV is also likely to announce up to 500 redundancies from its 4,500-strong workforce next week, in line with its gloomy annual results, which is less than six months after the last round of jobs cuts that saw 1000 staff leave the broadcaster.