Channel 5 Valued At £1bn By Sale Of Warburg Stake

An official value has been placed on Channel 5 for the first time since its inception, almost three years ago, as an 18% stake held by Warburg Pincus was sold last night to three existing shareholders for £172 million. At this price the whole of the terrestrial broadcaster is worth more than £1 billion.

Warburg put its 18% stake in C5 up for sale towards the end of last year (see Warburg Pincus To Sell Stake In Channel 5). Shortly afterwards, the three existing shareholders – United News & Media, Pearson and CLT-ufa – each decided to exercise its preemptive rights and acquire a third of the 18% (see Warburg Pincus Sells Channel 5 Stake To Shareholders).

For United, the increase in its C5 holding from 29% to 35% could cause problems for the group’s planned merger with Carlton Communications (see Media Merger May Hit Regulatory Obstacles). Under current ownership restrictions, no one group can take more than 15% of the UK television audience; Carlton/UNM previously fell just shy of this with a 14.9% share. However, after United’s increased stake in Channel 5 is accounted for, the combined group would command around 17.5% of total viewing. In 1999 Channel 5 took an average share of viewing of 5.3%.

There may also be further complications regarding the merged company’s control of advertising revenue – the current restriction for one company or group of companies is 25% of the market. However, this restriction was undertaken by the broadcasters themselves in 1994 and is currently being reviewed by the Office of Fair Trading (see OFT Embarks On Case Which Could Change The Future Of Televised Football). The viewing share regulations, on the other hand, could prove much more difficult to change as they are written in to the current Broadcasting Act.

The Carlton/United deal has been referred to the Competition Commission, which will examine these considerations before deciding whether the deal should be allowed to go ahead. A third ITV heavyweight, Granada Media Group, is also hovering around Carlton and United with a view to making its own bid for one of the two groups (see Deadline Given For Granada Bid Approval).

Channel 5: 020 7550 5555 United News & Media: 020 7921 5000 Pearson: 020 7411 2000 CLT-ufa Luxembourg: 00 352 421 423 003