Competition rules could stop Five/Channel Four merger

Any merger between Channels Four and Five would probably be stopped by the competition authorities, a new report claims.

In December the possibility of a merger between Channels Four and Five once again reared its head as RTL, the German parent company that owns Five, announced it was interested in acquiring state-owned Channel Four. A merger between the two channels was briefly discussed in 2004 but nothing much came out of it. However, as Channel Four is now facing a funding gap of up to £100m and RTL seeks to expand its activities in the UK, and strength its position, a merger between the two channels once again became a possibility.

However, any such merger would be subject to approval from the competition authorities something, a new report says, says will not happen. The report by Enders Analysis suggests the competition authorities would not allow such a merger, citing the example of the ruling that Sky must sell its shares in ITV as proof of such a denial. Sky bought 17.5% of ITV shares sparking anger from Virgin Media, and other companies, who complained to the competition authorities claiming that Sky now effectively owned ITV as it was the biggest share-holder in the commercial broadcaster. The competition authority has since ruled that Sky must share the majority of its shares within ITV. As well as considering merging with Channel Four, RTL are also said to be considering snapping up the ITV shares from Sky or making a take-over bid for ITV – another move which would also need approval from the competition authority.

The report by Enders Analysis also says that Channel Four is also in “relatively good health” and blame the funding gap of the ambitions of Channel Four to expand into new areas. As the report says that Channel Four isn’t under any danger of collapse once again the competition authority would likely rule against a merger.