C4 and Five merger deal gets boost from RTL and UBM

LONDON - The proposed merger between Channel 4 and Five, already written off by some, received a boost after Five owners RTL and United Business Media removed a potential hurdle saying they would be prepared to take a 40% stake if the broadcasters are merged.

The issue had been one of a number of potential sticking points in the merger of the publicly owned Channel 4 and Five.

Gerhard Zeiler, chief executive of RTL, said: "We are prepared to go to a minority position in a combined company. The idea of 4 and Five was not that we would take over Channel 4. Both channels need to be bigger."

However, is still unclear if that is enough for Channel 4 bosses. Even holding a 60% stake in a merged company might be seen as too little because the broadcaster is excelling in the market on its own.

Last year, Channel 4 had a turnover of over £770m and made £45m profit.

The broadcaster also increased its programme spend by £20m, after strong advertising revenue performance, which has resulted in a 5% year-on-year increase in audience share.

Five is also making its mark on the terrestrial market and has witnessed a steady increase in revenue and audience figures since its launch and is set to make profits of £12m this year.

This is the first time Five bosses have said they would be prepared to give up the controlling stake in a merged company. Yet the survival of the two terrestrial broadcasters in the UK, against ITV's formidable advertising house and with the digital switchover looming, seems the overwhelming factor in the merger talks.

Zeiler also hinted that if a deal was to go ahead it could be wrapped up by the end of 2004.

Merger talks between Channel 4 and Five have been going on for a number of months, although the idea of working together more closely dates back a number of years.

Current Channel 4 chief Andy Duncan played down his interest in Five at last month's Edinburgh International Television Festival and media commentator Ray Snoddy recently wrote in Marketing that the idea was well and truly dead.

"It's time to hold a wake for a very bad idea -- the proposed merger of Five and Channel 4. Some people may wonder whether this is a bit premature for something that has not been officially declared dead. But even if there is still a slight flutter of a heartbeat, believe me, the idea is well and truly dead," Snoddy wrote.

As well as its stake in Five, United owns business magazines and research firm NOP.

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