C4 chairman held talks with rivals

Channel 4 chairman Luke Johnson has held secret merger talks with Five owner RTL about merging the two UK broadcasters. The talks between Johnson and RTL chief executive Gerhard Zeiler took place around Christmas.

In an interview with The Observer, Johnson says he was encouraged to do so by communications minister Lord Carter. A tie-up between C4 and Five is said to be Lord Carter’s preferred solution to solving C4’s imminent funding crisis.

The discussions have been described by Channel 4 as “preliminary” and “unlikely to lead to a merger”.

Johnson has also held talks with telecoms operator BT over a possible merger, although BT is understood to have pulled out of discussions after it emerged C4 was seeking a potential tie-up with BBC Worldwide, the corporation’s commercial arm. BBC executives have said that such a tie-up would have no commercial logic.

Channel 4 chief executive Andy Duncan last week dismissed a merger with Five, calling it “mixing oil and water”. He did not attend merger talks with the channel.

Media regulator Ofcom is due to publish a report on public service broadcasting next week, looking at its future post 2012, when the analogue signal is switched off. It will be swiftly followed at the end of the month by the release of the Digital Britain report, which is expected to call for an overhaul of funding mechanisms.

C4 has repeatedly called for public funding, saying it faces a deficit of up to £150m a year by 2012 if it does not receive help.

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