Sky's convoluted plot for control of Five

[BGonaSTICK]

Channel 4 News breaks a story about Sky selling its stake in ITV to Five's German owner, which could pave the way for Sky to take possession of Five. Confused? Don't be. It's just the latest in a long-running sequence of events which could shape Britain's television industry for the next decade or so.

The stock market was abuzz with rumours on Friday afternoon after C4's lunchtime news claimed BSkyB was in talks to offload its 17.9 per cent stake in ITV to RTL, the German broadcaster that owns Five - possibly in exchange for RTL's control of the channel. The deal would make sense for both parties. RTL could use its holding to launch a full bid for ITV, regulator permitting.

Sky, meanwhile, would take possession of a terrestrial channel for the first time, allowing it to screen a selection of programmes available on its pay-TV platform to free-to-air viewers, and drive subscriber growth.

So far, so simple. But last week's decision by Trade Secretary Alistair Darling to refer Sky's £900m acquisition of its ITV stake to the Competition Commission, although widely expected, could put a spanner in the works.

Sky cannot offload its stake without the permission of the commission, according to some reports, despite the fact that the commission may ultimately force it to dispose of the holding.

The two sides are believed to have held talks at some point in the last few weeks, and the market has certainly taken the rumours seriously; by the end of trading on Friday ITV's share price closed up 4.5p (or nearly 4 per cent) at 119p.

The irony is that Virgin Media tried to buy ITV last year, prompting Sky to acquire a stake in order to block the deal - and sparking the inquiry. But if the latest rumours are true, Virgin could end up owning nothing, with RTL controlling ITV, and Sky taking possession of Five. That would leave Virgin, which led the calls for a probe, looking comprehensively outmanoeuvred by BSkyB chief executive James Murdoch.

But there could be further twists. There is intense speculation about a possible privatisation of C4, which is funded by advertising but owned by the government. Chancellor Gordon Brown is said to be considering a sell-off once he becomes Prime Minister, although C4 played down rumours last week.

A disposal cannot be ruled out, partly because C4's value is likely to fall as its profits continue to decline. It is asking for a government handout, but if Brown is forced to choose between a sale or a subsidy, he may opt for the former. That would push C4 into the hands of a rival broadcaster, and prompt yet another round of channel-hopping.

[Stv]

Interesting post

Is C4 channel 4? I never realised they were public owned... I wonder if that makes them civil servants.

Also, if Gordon doesn't get his hands on the spectrum auction then I guess he will likely consider selling C4 to fix the hole in his budgets

[BGonaSTICK]

Interesting thought.

I have a feeling the hole is going to be much larger than the plug though... the spectrum sale would be very profitable methinks.