Web struggles with shrinking ad markets, revenue
Pan-European broadcast group RTL may be about to give up on its under-performing U.K. terrestrial web Five.A spokesman for Luxembourg-based RTL, majority owned by Bertelsmann, refused to comment on local reports that it is prepping a sale but added that “consolidation in the U.K. broadcasting market” was inevitable. Despite a new management team led by U.K. TV topper Dawn Airey, Five remains very much the runt of the British terrestrial litter. Airey’s arrival at the web coincided with the fall in the advertising market, which hit Five harder than rivals ITV and Channel 4. Five lost £37 million ($53 million) in 2009, and RTL has written down the value of its investment in the web from $712 million in 2007 to $137 million two years later. Declining revenue has forced Airey to cut costs, and RTL’s long-held desire of being first or second in the local market looks even harder to achieve today than before she came on board. On more than one occasion Airey has signaled that Five cannot survive as a stand-alone station. Airey backed a merger with state-owned Channel 4, also suffering from a decline in advertising. But that plan failed to gain traction despite enthusiasm from the government. Early last year, Bertelsmann’s chief finance officer said that the broadcaster’s business model was “not sustainable.” But if Five is up for sale, the question is who would buy it? Rumors suggest that U.S. media companies such as Time-Warner are possible bidders. So, too, is Rupert Murdoch’s pay TV platform BSkyB, which has thrived despite the recession, and production powerhouse Endemol, which is in the throes of restructuring its debt.
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