The tie-up will help to plug a £150m funding gap Channel 4 will face from 2012.
Smith says the deal is likely to be inked within weeks and will see it take over parts of Channel 4’s divisions including advertising sales.
The news comes as BBC Worldwide yesterday (July 14) reported a 12.8% fall in operating profits to £102.6m in the 12 months to March 31.
It has been hit by the failure of Project Kangaroo and 2entertain, the DVD distribution joint venture with the now defunct Woolworths Group.
Smith says the figures reflect the £50m investment it has made in new initiatives last year, in spite of a severe economic downturn impacting all parts of the media industry.
The company did mange to see revenues rise 9.5% to £1.003.6bn from £916.3m.
During a media briefing in May, Channel 4 chief executive, Andy Duncan, said that discussions with BBC Worldwide were “going well” and that he remained “confident” of a positive outcome.