C4 to C5 or BT?

CHANNEL 4 held merger talks with telecoms group BT after it launched its IPTV service, it has emerged. The broadcaster's chairman, Luke Johnson, met Ian Livingston, chief executive of BT, on more than one occasion last year to discuss a tie-up. "They have obviously got a pipe into every home in the country, they have got vast scale and they are pretty advanced technologically," said Johnson. "There is some complementarity."

Channel 4 has argued it needs public subsidy in excess of £100m (E127m) a year to maintain its public service programming as advertising revenues dwindle. Putting the company into a public-private partnership is emerging as a favoured option with politicians, with rival Five the most obvious choice and one likely to be recommended by Ofcom, although Lord Carter has backed away from anything so specific.

The chief executive of Channel Five parent company RTL Gerhard Zeiler has put his case for a merger of the broadcaster with Channel 4, saying it would deliver “real benefits” to viewers. Zeiler said a union would guarantee the future of both channels as commercial public service broadcasters with their own identities, and that a tie-up made “particular sense” in the current economic climate.

He dismissed the option of state-owned Channel 4 using public money to fill a funding deficit, saying it did not resolve structural issues.

Zeiler said RTL, which owns TV and radio stations across Europe as well as London-based American Idol and The X Factor producer FremantleMedia, had a good record of working in successful partnerships overseas and would “welcome the interaction that a new partnership with the UK government would bring”.

His comments are at odds with Channel 4 management. The broadcaster’s chief executive, Andy Duncan, dismissed talk of a merger with Five as “mixing oil and water” last week, while chairman Luke Johnson said it would be a “tragedy."

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