C4 and Five set to merge?

net1

UK's Channel 4 has hired investment bank UBS, to help it to decide its future strategy, including whether it should merge with the rival Five.

As more UK homes turn to multichannel television, C4 is evaluating its long-term options. Its' traditional audience share is about 13 per cent, but in homes with digital television the broadcaster's share drops to between seven and eight per cent.

To address this, C4 was reportedly seeking government approval to allow it to merge with Five. The two have already admitted to holding talks when they first got together to discuss plans to combine their airtime sales houses. C4 has also held talks with other broadcasters, including Telewest-owned Flextech, which is behind the cable channels Living and Bravo. Meanwhile, Five owners RTL and United Business Media both see a merger as part of Five's future.

It is understood that Luke Johnson, C4's Chairman, also wants to develop the business by gaining more financial independence from the Government. The Treasury currently restricts Channel 4's borrowings to £200 million.

UBS will work closely with Johnson and CEO Andy Duncan, who are expected to decide their plans by the end of the year, when Ofcom, the regulator, completes a review of public service broadcasting.