Would a Channel 4 and Five merger prove a success?

The idea of a C4 merger with Five is gathering pace as industry reviews by communications minister Stephen Carter and Ofcom near publication. Would such a deal solve C4's problems?

YES - Jim McDonald, head of broadcast, MPG

There is an element of self interest in BBC director-general Mark Thompson's recent suggestion that the two should merge. Clearly he doesn't want Channel 4's well-publicised funding gap to be addressed by slicing of the licence fee, or by Channel 4 dipping into the revenues of BBC Worldwide.

Common ownership of Channel 4 and Five could be in the best interests of viewers. And, generally, when viewers' interests are best served, advertisers benefit too. Channel 4 and Five are quite different in their content, and for good reason. It would be counter productive if the identities of the channels were to be diluted, particularly that of C4, which has arguably the strongest brand in UK TV.

It would be critical that commissioning and scheduling policies remained separate too. But if consolidation meant the emergence of two distinctive and better resourced channels, the commercial TV landscape would be better off for it.

YES - David Hulbert, director, Ravensbeck, ex-head, Disney International

From a business perspective, Five owner RTL Group would bring scale, leverage and expertise to Channel 4. Operating synergies between C4 and Five would be considerable, and a rationalised management team could slim down, focus and upgrade the joint portfolio of broadcast, digital channels and other ventures.

C4 creative executives could also contribute productively to RTL Group's business interests outside the UK. Ofcom and RTL Group could also feasibly negotiate a public service mandate that would maintain (and even enhance) C4's idiosyncratic cultural role.

If such a merger does not take place, C4 will need increasing long-term public subsidy. Stand-alone free-to-air broadcasters are in decline in developed markets around the world, even where they do not compete with generously subsidised dominant players such as the BBC.

NO - Bernard Balderston. Assoc. director, UK media, Procter & Gamble

The only merger that might make any sense in the TV industry is a consolidation of sales resource following any future relaxation of CRR rules. Indeed, Channel 4 might look to turn first to Sky or other multichannel sales points as preferred partners before embracing Five. Merging the privately owned Five with not-for-profit C4 would be a logistical nightmare.

And it would still not provide any greater chance of Channel 4 securing the extra funding that it needs to succeed in the future. Five is very vulnerable in terms of access to good programming and thus audience delivery, so a merger with Channel 4 would not help the audience delivery of either station.

Rather than a Channel 4 merger, RTL Group must be pondering the cost of exiting Five and instead buying ITV if it is to succeed in the UK.

NO - Richard Oliver, managing partner, investment, Universal McCann

For Five's owner, maybe. RTL Group would get a bigger foothold in the UK market, albeit one shackled with higher PSB responsibilities.

For the Government and Ofcom, a merger could be a success. They would get a difficult problem off their hands - the future funding of C4 - without upsetting the BBC.

For Channel 4, a merger would not be a success. Five would contribute nothing C4 needs. For viewers, it would not be a success either. Ultimately, a price of the merger would be that less original programming is commissioned across the two channels.

For advertisers and agencies, a merger would not be good. There would be concerns over a greater concentration of ad revenue and impacts, in a market that already requires regulation to maintain fair competition. Above all, the concern would be for C4's unique and distinctive output, which advertisers value and can only be maintained if it remains independent.

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