Channel 4 Hires UBS As It Mulls Merger With Five
Channel 4 has appointed investment bank UBS to review its strategic options, in a move that has sparked speculation that the state-owned broadcaster is edging closer to a merger with commercial rival, Five.
The two channels have made no secret of their desire to forge closer links and have held tentative discussions about the logistics of a merger. However, the Observer claims that Channel 4 has also been in talks with other broadcasters including cable company Flextech.
Channel 4’s recently appointed chairman, Luke Johnson, has been the driving force behind the merger talks. He believes that linking with other broadcasters is the only way to protect the channel’s audience share in the face of increasing competition from the multchannel sector.
The hiring of UBS marks the first time that the board of Channel 4 has sought outside help and marks the clearest sign yet that the broadcaster is giving serious consideration to a merger as part of its long-term survival strategy.
Attention now looks set to turn towards the Government, which will have to green-light any merger plans involving Channel 4, which is a state-owned company with a complex public service charter. However, Five’s minority stake holder, United Business Media, recently indicated that there might Parliamentary support for further negotiations (see Government Could Back Merger Of Commercial Channels).
Five’s biggest shareholder, RTL, also sees a merger as key to Five’s future in the face of competition from the three key forces in British broadcasting – the BBC, BSkyB and ITV. The company’s chief executive, Gerhard Zelier, said: “In the next eighteen months we will make a decision on which alternative we are going to take. What we need is a multichannel strategy.”
Earlier this year it was reported that the Government is preparing a valuation of Channel 4 as the Treasury gives consideration to a sell-off of the state-owned broadcaster. Government officials are understood to have consulted several city banks over the valuation process, giving a clear indication that privatisation for Channel 4 and a merger with Five could get the go ahead.
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