Channel Five in the UK shop window – surely Sky will make a move?

Channel Five, or Five as it likes to be known, is officially up for sale according to a report in the Daily Telegraph.

The terrestrial station, which is owned by Luxembourg-based RTL which in turn is majority-owned by German media company Bertelsmann, seems to have given up on striking a partnership with Channel 4 and is making itself available to the highest bidder, regulators allowing.

Five is valued in RTL’s books at just £95m but any successful bidder would inherit a history of losses (£36m last year), expensive rights for shows like Neighbours and CSI and an advertising share of under ten per cent of the UK market.

But that ten per cent or less, although not enough to support Five as a stand alone business would be very useful indeed to ITV, Sky or Channel 4.

For ITV it would present the problem that it would push the station’s share of the commercial TV audience back over 50 per cent so it could wave goodbye to the prospect of having the CRR formula restricting its airtime charges removed any time soon, even if the regulators allowed it to buy Five. Channel 4 isn’t exactly flush with cash.

But Five would make a lot of sense for Sky, 37 per cent owned by News Corporation. Sky generates piles of cash through subscriptions (although the level of these is coming under pressure from industry regulator Ofcom) but its ratings are low in comparison to free to air broadcasters. A decent rating for Five is currently about five per cent of the audience, for Sky 1 it’s about 1.2 per cent.

Therefore Sky is not as big a player in the advertising market as it would like to be although advertisers such as car and drinks companies pay a premium to be in its live football coverage. But even with Five its share wouldn’t frighten the regulators.

News Corp, which in effect controls Sky, is awash with content through its Fox film and TV businesses in the US. Interestingly it is also said to be on the point of increasing its stake in independent producer Shine, majority-owned by Elizabeth Murdoch whose father is you know who. Shine makes cult show Ashes to Ashes among many others. So even more entertainment content is potentially available.

Other bidders have been mentioned too including super-indy Endemol, which is looking for a UK home for Big Brother after being bounced by Channel 4, Warner and Disney. But all these would have to make Five work as a stand alone company and there’s no evidence to date that that can be achieved.

Five is run by industry veteran Dawn Airey, her second time in charge after unhappy forays to ITV and into independent production. She famously described the then youthful Five as ‘films, football and fucking,’ after its chosen programming format which included mildly porny late night films. Airey has also toiled at Sky.

So it’s a shoo-in for Rupert Murdoch then? It should be.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.