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Channels stay split

U.K.'s C4, Five pull plug on merger plans

LONDON — The merger of Blighty’s two smallest terrestrial webs, Channel 4 and Five, part owned by pan-Euro media group RTL, is off.

A statement from C4 effectively ended months of speculation regarding a tie-up between the two as a way of protecting their businesses in a digital future.

A proposal to withdraw from marriage talks was put to the C4 board Monday after a series of meetings between the two outfits.

While new CEO Andy Duncan has ruled out a full merger, he has made it clear that C4 is willing to continue exploring smaller-scale operational relationships with Five. The two broadcasters have previously jointly acquired packages of movie rights.

Duncan said: “Our overriding objective is to future-proof Channel 4 as a public service corporation and to maximize the contribution it makes to broadcasting in this country.

“With concerns being raised about our future funding it was legitimate for Channel 4 to explore this merger, but we’ve concluded that protecting and strengthening C4’s public service role isn’t compatible with the full merger that was proposed.”

The announcement is hardly a surprise.

In August, Duncan indicated that he was as interested in exploring partnerships with the BBC as he was in any tie-up with Five, whose other owner is United Media.

It was Duncan’s predecessor, Mark Thompson, who had initially explored a partnership between the two broadcasters.

It remains to be seen how C4 intends to “future-proof” itself against what it believes will be a hostile commercial environment once digital switchover kicks in.

One possibility, floated recently by C4 deputy chairman Barry Cox, is that it will attempt to secure a subsidy from the government.

Its case will not be strengthened by what is anticipated to be a strong set of results next year as profits are expected to be in the region of £70 million ($120 million).

Nonetheless, C4 believes that its mix of ratings-chasing and public service fare is under threat, especially as Blighty’s biggest private commercial web, ITV, is a merged company, thus making it a bigger fish in the airtime sales pool.

Monday it was reported that one of the U.K.’s most successful indies, Phil Redmond, whose Mersey TV has made shows for C4 since it launched in 1982, has offered to buy C4 and run it with its public service commitments in tact for the next decade.

One thing is clear — at this stage, and with Duncan and C4 chairman Luke Johnson relatively inexperienced, C4’s future is far from clear.

As for Five, it also feels threatened in the long term for the same reasons as C4, but it, too, is performing well.

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