http://www.thisislondon.co.uk/standard/art...#39;/article.do

Cash-strapped Channel 4 'to merge with BBC channel'

Amar Singh

11.12.08

A DEAL to merge Channel 4 with the BBC's commercial arm is being considered by regulators and ministers in a bid to guarantee the broadcaster's future.

BBC Worldwide, which owns 28 channels around the world, lucrative rights to DVDs and some programmes as well as the Lonely Planet brand, would provide Channel 4 with £100 million a year - which media regulator Ofcom believes it needs to survive.

Channel 4 faces running out of cash within the next five years as advertising revenues decline. Last year its profits were just £1.6 million and analysts believe the figure will plunge into the red this year because of the economic downturn.

It has appealed for help from the Government and Ofcom, with the BBC merger the latest option under discussion.

Under the scheme, said to be "gaining traction", the BBC would give Channel 4 a majority holding in Worldwide, allowing it access to substantial revenues and control of the business.

The revenue would be used to support the "distinctive" public service broadcasting Channel 4 was set up to provide.

If there's a merger, what will this mean for Hollyoaks.

wow, I remember when I lived in England 20 years ago, Channel 4 was the hip channel. There were only 4 (BBC1 BBC2, ITV, and Channel 4) and they had the hip talk shows and whatnot. Sorry to hear they are on hard times.

Transfer of assets from BBC Worldwide to Channel 4 'fanciful'

The BBC Trust chairman, Sir Michael Lyons, today hit back at suggestions that BBC Worldwide assets could be transferred to Channel 4, calling such a proposal "pretty extraordinary".

In its own proposals on how to help secure the future of UK public service broadcasting, published today, the corporation revealed that it is in talks with Channel 4 about potential partnerships with BBC Worldwide, its commercial arm.

But these stop short of giving Channel 4 a stake in the BBC's programme and format sales, international production, magazine publishing and merchandising business.

"The proposition of Worldwide being taken away from licence fee payers who have invested in it is pretty extraordinary," Lyons said.

"Worldwide depends on the BBC brand and the stream of intellectual property rights. Take them away and it is not the same company. This distracts the sector from finding some solutions rather than [what is] pie in the sky," he added.

"We haven't had any discussions so far relating to any proposition about Worldwide. There are no discussions going on within the BBC about the transfer of Worldwide to Channel 4," Lyons continued.

"That would be massively distracting from the problems in hand. The danger is that this fanciful idea distracts from what is actually doable," he said.

Mark Thompson, the BBC director general, added: "There is an artery of value to Worldwide from the BBC. You cut that and you end up with a catastrophic loss of value.

"It doesn't really pass more than five or 10 minutes of scrutiny before you see the gaps in it," he said.

The BBC tried to shift the focus away from Channel 4's problems by saying its plans were about the future of the whole industry.

"There is no way this is the BBC's solution to the Channel 4 problem. It is a much broader approach that that," Lyons said.

Both Thompson and Lyons also said the argument about top slicing the licence fee had now subsided.

"No one is seriously arguing for top slicing in any of the responses [to Ofcom's consultation]," Lyons said.

Thompson added: "Talking to people, top slicing has rather drifted away as an idea."

Thompson insisted that the plan to share iPlayer technology with other PSBs was "consistent" with Project Kangaroo.

He said discussions were still ongoing about sharing the on-demand technology with other PSBs, but said a potential idea could see each broadcaster have an iPlayer portal showing their own content on their website.

Thompson added that there could also be a central, advertiser-free combined iPlayer site with a front page promoting all PSBs' video content, with each commercial broadcaster then having ads on their own click-through site.

Lyons said: "Much of the current debate has focused on changes to regulation and funding to find a solution. But these approaches merely slice the existing pie in different ways. They do not attempt to grow the pie.

"Of course, coming together as partners must not imply a reduction in competition. This is not about the BBC bearing gifts, but about extending the BBC's public purposes by working with partners to develop new ways to bring high quality content to all our audiences."

The BBC Trust said that it has now opened a three-month consultation on the proposals.

Lyons added that if a path forward could be agreed then benefits could be seen in the next 12 months, providing "an early Christmas present for 2009 to our audiences".