Amid a frenzy of expectation about how weak its full-year performance will prove to be when reported next week, ITV said on Wednesday that it had considered a range of possibilities for its own future, including a merger with Channel 4 and RTL’s Five.
With a looming deadline of March 12 for broadcasters to submit their views to Lord Carter’s Digital Britain review, ITV said the idea was part of a “blue-sky thinking” process it had undertaken.
The company said Lord Carter had encouraged all participants to come forward with radical ideas.
But a person familiar with the company’s strategy said it was unlikely that ITV’s participation in any consolidation of public-service broadcasting (PSB) would be part of its submission to the Digital Britain review.
The idea has not been discussed by the ITV board, the person said, although policy specialists within the company had debated a number of “radical ideas” both internally and in discussion with government officials.
“ITV is fully engaged in all sorts of blue-sky thinking and it would encourage the Carter review and the government generally to be radical in their approach,” the person told the FT.
Both competition law and the Communications Act 2003 would make it difficult for any mergers in the commercial free-to-air television market to take place. They would be likely to be fiercely opposed by rivals such as British Sky Broadcasting and by the advertising industry.
In its approach to UK media, the Digital Britain review focuses on how to salvage commercial PSB and especially the future of C4.
ITV’s 2008 results are expected to show revenues down markedly. It is currently working on a second deep wave of cost-cutting, which is likely to see a reduction in mid-tier executives, according to people familiar with the situation.
The government’s preferred method of ensuring the future of C4, which is expected to be losing at least £100m a year by 2012, is to merge it with the BBC’s commercial arm Worldwide. But the government team behind the Carter review has also been talking to those who control Five, including Dawn Airey, its chief executive, and Gerhard Zeiler, chief executive of its parent RTL, about the possibility of merging with C4.
Executives from Five and RTL have met non-executive directors of C4.
Ms Airey said yesterday that Five would grow in size “by hook or by crook”.
“What is going to happen is quite apparent and that is consolidation,” she said in an interview on BBC radio about the future of PSB.
“Sure as night and day, Five will be part of that. By merger or acquisition, by hook or crook, Five will get bigger.”
Until yesterday, ITV has kept quiet about its role in the future of PSB. Before the Digital Britain report, Michael Grade, the executive chairman, said that he would reduce the company’s spending on PSB programmes to the value it got from holding a public-service licence, which is estimated at about £40m by the end of next year.
Shares in ITV, which reached a new low of 22½p on Tuesday, rose 4.3 per cent on Wednesday to closing at 24¼p, valuing the company’s equity at £943m.
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