Channel 4 Walks Out On Merger Talks With Five
Channel 4 has walked out of its merger talks with rival broadcaster Five after concluding that obstacles to a tie-up between a state-owned and a commercial broadcaster were too difficult to overcome.
The move was confirmed to Five’s management and shareholders by Channel 4 chief executive, Andy Duncan, and chairman, Luke Johnson, yesterday, as Duncan explained: “With concerns being raised about our future funding it was legitimate for Channel 4 to explore this merger, but we’ve concluded that protecting and strengthening Channel 4’s public service role isn’t compatible with the full merger that was proposed.”
The decision leaves Channel 4 to concentrate on trying to secure public funds to protect its future. Five, on the other hand, is now under pressure to expand to avoid closure.
Five’s shareholders, German television group RTL and United Business Media, had hoped to win a 40% share of the combined business, while Channel 4 is understood to have been less keen, believing its rival deserved no more than around 15% (see RTL Expresses Interest In Channel 4 And Five Merger).
The collapse of merger talks will come as no surprise to industry insiders, with the two broadcasters believed to be far from agreeing a deal.
A combined broadcaster would also have needed to satisfy Ofcom, the industry’s regulator, as well as the Government, neither of which wanted Channel 4 privatised, while Five would have had to satisfy shareholders’ desire to make a profit.
In a statement yesterday, Five claimed that “the complexity” of bringing two broadcasters together was “too great”.
While Channel 4’s Duncan has ruled out a full strategic merger, he has made it clear that Channel 4 was willing to continue exploring smaller scale operational tie-ups with Five. The two broadcasters have previously jointly acquired packages of movie rights.
Many believed the reason behind the merger discussions was widely held belief that, individually, neither Channel 4 or Five are big enough to survive in the multi-channel world, as the number of digital channels continue to proliferate and further fragment television as a medium (see Channel 4 Hires UBS As It Mulls Merger With Five).
Channel Four: 020 7396 4444 www.channel4.com Five: 020 7550 5555 www.five.tv
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