Business News Media

Grade proposes an ITV-C4-Five merger

By | Published on Thursday 26 February 2009

ITV top man Michael Grade has suggested that one solution to the current problems being faced by both his company and commercial public service broadcaster Channel 4 would be for the two companies to merge, and for that merged company to then merge with Channel 5, basically putting all of the non-BBC terrestrial telly channels into the ownership of one body.

It’s a radical plan, but then again Grade can be a bit radical when he wants to be. Such a move would, of course, need government backing, as it would technically speaking breach media ownership and competition laws. And BSkyB would be sure to lobby hard against the creation of a competitor as powerful as Channel-ITV-Four-Five. Especially given that their being forced to sell their share of ITV.

Grade’s radical plan is being mooted as he tries to make ITV’s books balance in the face of a major advertising recession and growing competition for other digital services. As previously reported, Grade is expected to sell Friends Reunited and ITV’s bit of the Freeview infrastructure, and then slash programme budgets and cut jobs, in a bid to make things add up. And even then he may still have to cut dividend payments to shareholders.

Another radical plan Grade is reportedly putting about is for Channel 4 to become a wholly publicly funded enterprise – presumably funded by the licence fee – thus taking a major competitor for terrestrial TV advertising out of the marketplace. Though given the government’s unwillingness to give Channel 4 bosses a share of the licence fee to supplement advertising and sponsorship revenues, they are unlikely to support those proposals.

As previously reported, the government’s recent Digital Britain report smiled on proposals for Channel 4 to either merge with Channel Five, or to forge a closer alliance with the BBC’s commercial division BBC Worldwide, in a bid to overcome their future financial problems.

Channel Four prefers the latter of those proposals, and is already in talks with Beeb Worldwide – with proposals that C4 buy Virgin Media out of the UKTV network, so that that becomes a C4/BBC joint venture, seen as a stepping stone towards the Beeb and Channel 4 launching a combined commercial broadcasting enterprise with public service objectives, assisted though not funded by the licence-fee funded main bit of the BBC.

That said, the BBC Worldwide/C4 partnership is reportedly raising concerns among some political types, and a parliamentary report leaked to the Guardian opposes those proposals, saying it will make BBC Worldwide too commercially dominant and “aggressive”. The report apparently suggests a number of new rules to restrict the operations and growth of BBC Worldwide, with or without a Channel 4 alliance.