Channel 4 is being eyed for takeover by German group RTL, it has been reported.
RTL, which owns channel Five, is said to have asked investment bank JP Morgan to look at a possible takeover bid for Channel 4 as the UK broadcaster faces a funding crisis, according to the Sunday Times.
Any deal could reportedly cost RTL as much as £500 million and would come four years after previous merger talks between the two broadcasters hit the rocks.
Channel 4 is suffering from a funding gap and has previously warned that it would run out of money by 2012 if a solution is not secured.
The channel is State-owned, but it is funded by advertising, which has been hit severely amid the wider economic troubles.
Its advertising revenues are also set to come under pressure when the switch to digital broadcasting is completed and multi-channel TV begins to eats into its audience.
Regulator Ofcom recently estimated that Channel 4 could need extra funding of up to 100 million by 2012 to deliver its existing remit. The watchdog is considering options, such as handing over some of BBC’s annual licence fee to Channel 4.
It has also been mooted by the regulator that one funding source for Channel 4 could be for it to take control of some or all of BBC Worldwide, the BBC’s commercial arm.
But a bid from RTL would ease Channel 4’s funding troubles and would fulfil RTL’s long-held ambition to expand further in the UK.
It already owns more than 40 TV channels in 10 countries and has recently been rumoured to be interested in buying ailing rival ITV.
RTL was not immediately available for comment.
Big Brother broadcaster Channel 4 is being eyed for takeover by Germany group RTL, it was reported today.
RTL, which owns channel Five, is said to have asked investment bank JP Morgan to look at a possible takeover bid for Channel 4 as the UK broadcaster faces a funding crisis, according to the Sunday Times.
Any deal could reportedly cost RTL as much as £500 million and would come four years after previous merger talks between the two broadcasters hit the rocks.
Channel 4 is suffering from a funding gap and has previously warned that it would run out of money by 2012 if a solution is not secured.
The channel is State-owned, but it is funded by advertising, which has been hit severely amid the wider economic troubles.
Its advertising revenues are also set to come under pressure when the switch to digital broadcasting is completed and multi-channel TV begins to eats into its audience.
Regulator Ofcom recently estimated that Channel 4 could need extra funding of up to £100 million by 2012 to deliver its existing remit.
The watchdog is considering options, such as handing over some of BBC’s annual licence fee to Channel 4.
It has also been mooted by the regulator that one funding source for Channel 4 could be for it to take control of some or all of BBC Worldwide, the BBC’s commercial arm.
But a bid from RTL would ease Channel 4’s funding troubles and would fulfil RTL’s long-held ambition to expand further in the UK.
It already owns more than 40 TV channels in 10 countries and has recently been rumoured to be interested in buying ailing rival ITV.
RTL was not immediately available for comment.
This is where it finally becomes real. Twenty five years of cosy broadcasting relationships between the BBC, ITV and Channel 4 are at an end and the only certainty is that after a flurry of activity nothing will be the same again.
Yesterday, the BBC presented a series of proposals aimed at “boosting” the revenues of commercial broadcasters, offering a bit of iPlayer technology here, a bit of help with regional news-gathering there, and a quiet word to Channel 4 that it might help it to launch a few magazines, too.
Apparently, all this might be worth £120 million a year one day, but outside the BBC nobody believed such predictions. No wonder Sir Michael Lyons, chairman of the BBC Trust, presenting the proposals with Mark Thompson, the Director-General, looked so uncomfortable. It was not the portrait of Lord Reith looking sternly at him from the wall of the BBC council chamber, but surely the growing realisation that the much-hyped plan was failing.
For the first time, the BBC faces the prospect of losing a limb: either some of the licence fee will be lopped off for Channel 4 or – in a surreal twist – its commercial arm, Worldwide, will be merged into a “4 Worldwide”.
Surrealist art makes sense only after the artistic movements that have gone on before it are considered. Similarly, the notion that Reith’s Radio Times, or the exploitiation of BBC programmes in DVD form or internationally, should be handled by a new company seems bizarre, until the background is taken into account.
First, Ed Richards, chief executive of Ofcom, has concluded that all high-quality programming is apparently disappearing from our screens at a terrifying rate (never mind that a satellite channel can air a provocative, harrowing, but well-judged programme about assisted suicide). Then it has to be accepted that Channel 4 is right when it says it is going to go bust, and that is has to preserve its exact mix of expensive, not always high rating programming to survive (when it failed to diversify succesfully in its first 25 years).
All this makes it imperative to protect Channel 4, and indeed the nation, from an apparently scary future in which there is only one viable state-owned broadcaster (ie the BBC). But this is not the time for counter-arguments: barring a miracle, Ofcom and ministers seem to have decided that Channel 4 must be saved.
The inevitable conclusion – and here at least those in charge have got this right – is that it is outrageous to take BBC licence fee cash. Nor does Channel 4 deserve any other public money in these straitened times.
So, finally, what’s left is BBC Worldwide being injected into an enlarged Channel 4, with the BBC given a minority stake as a consolation. A bit of this idea even makes sense: bringing the UK TV channels, BBC magazines, and some of the controversially acquired Lonely Planet – might sit well in a bigger Channel 4. That bundle alone would contribute over £30 million a year.
Yet, the rest is nonsense. Why should anybody other than the BBC run BBC channels abroad, or sell BBC DVDs or BBC progammes internationally? The BBC should be allowed to exploit its programme rights. And it is harsh treatment for an organisation that has been well run by John Smith, chief executive of BBC Worldwide, to see it dismembered and handed to Channel 4, with its dysfunctional board and where its entire strategy for the past three years has been based on begging for cash.
But this is not the way the argument is going. Perhaps the only solution is for RTL, the owner of Five, or perhaps Sky, to make an offer for Channel 4, promising to respect its culture through a regulatory agreement with Ofcom. An offer of more than £500 million would turn heads, but one suspects that even then, nobody in government wants to listen.
One wonders, then, what happened to the good old-fashioned British muddle. Why not give Channel 4 free spectrum (it pays for some), if it is that important, some bits of BBC Worldwide, and insist on serious cost savings at an organisation where executives are paid too much compared with their BBC peers. This might get to a £50 million package quickly, leaving the BBC relatively unmolested, and leaving Channel 4 to reapply in two years’ time if it needs more.
— Michael Grade, over at ITV, ought to be delighted. While the BBC and Channel 4 fight, he can get away with being let off all sorts of regulatory obligations with nobody noticing. After all, if it is so important that Channel 4 be propped up, it ought to be the case that ITV should be allowed as much commercial freedom as possible.
There is no need for three state-influenced broadcasters. All that matters to ITV is that Channel 4 continues with its formula: if it became fully commercial, it would inevitably steal viewers, and hence advertising, from Grade’s network.
And while everybody is so distracted, he can go further: why has it taken so long for ITV to find a friendly long-term investor? When the economy recovers, yesterday’s 39p a share will look good value.
