It's no surprise that Channel 5 is eagerly casting around for a
white knight to haul it up a gear. The channel may be gaining in
confidence, but the bigger picture is one of simply treading water.
Even if the TV market wasn't in recession, Channel 5 needs either a
bigger platform or a bigger stakeholder to batten down its long-term
future. Attempts to expand its sales operation with independent
contracts from other broadcasters have been mooted, but nothing has
materialised and its messy shareholder structure has meant that there is
not the paternalistic drive to invest in the product that some other
That it should entertain conversations with Rupert Murdoch is also no
surprise. Over the years, Murdoch has made no secret of his desire to
get into UK terrestrial TV and Channel 5 is a reasonable point of
Channel 5's unsatisfactory shareholding structure affords Murdoch
several possible routes to entry. RTL, Channel 5's largest shareholder,
is co-owned by Germany's Bertelsmann and Pearson, and Pearson has made
clear its intention to off-load its investment in RTL at some point.
Then there's Lord Hollick's United Business Media, which once held a
raft of TV interests but which has now clearly redrawn its strategy away
from the TV market.
And, finally, the Channel 5 management are said to be interested in
getting into bed with Murdoch - not just for access to his purse but
also to a bigger ad sales platform (which Channel 5's deputy chief
executive, Nick Milligan, would no doubt like to get his hands on).
The problem with the whole scenario, though, is the usual knee-jerk
jingoistic fear that meets any suggested strengthening of Murdoch's hand
over the UK media industry. Yet the Murdoch/Channel 5 deal might
indicate there's a bigger (foreign) game in town. Because if Murdoch
gets his hands on RTL's stake, RTL will release equity to make an even
bigger move elsewhere.
RTL is already cash-rich and ambitious. It is keen to make greater
inroads into UK TV and the obvious next port of call would be an ITV
At ITV there is a stench of vulnerability in the air, more than enough
to attract potential predators. So perhaps Murdoch's move on Channel 5
could herald a bigger deal in British TV and the emergence of RTL as a
major terrestrial player.
All of which begs the question about TV legislation. By the time the
draft Broadcasting Bill is produced next spring, the Government could
well find itself playing a game of catch-up. Again. If Murdoch and RTL
pounce while stocks are down, the Government could be forced to endorse
a commercial structure which has already been dictated by market
conditions - which is, after all, what happened when Granada took on
Hollick's ITV licences. Deals wait for no man, particularly in a
recession where bargains are to be had.