Speaking at a Channel 4 Leadership Breakfast in London’s Ronnie Scott’s venue today (1 April), both Channel 4’s David Abraham and BT Consumer’s John Petter questioned the value of acquiring Channel 5 to their businesses.
Earlier this year The Guardian reported that Desmond, who also owns the Daily Express and Daily Star newspapers, had set a £700m valuation for his TV business – 10 times the estimated £70m in profit it makes each year.
BT was reported to be one of the front-runners to bid for the business, as it could leverage the free-to-air channel to add an extra dimension to its renewed TV strategy – especially visibility in the EPG (electronic programming guide) – following its multi-million pound sports rights acquisition land grab to launch its BT Sport channels.
However, BT’s Petter said while he could not comment on speculation, from a consumer and advertiser value perspective “there’s just not a lot to hang your hat on” in Channel 5. When pressed as to whether this would rule BT out as a Channel 5 suitor in the short term, Petter replied “it counts us out for any term”.
Abraham also appeared to dismiss the idea of his business buying Channel 5, saying Channel 4 is more focused on creating “distinctiveness in the marketplace”, “demographic delivery”, “targeting and innovation” and “quality of audience” rather than looking to chase the audience and advertising sales volume that the consolidation of the two broadcasters would provide.
Speaking to Marketing Week after the event, Channel 4 sales director Jonathan Allan said “[Channel 5] is not worth £700m”.
He explained that with the contract for the Big Brother franchise up at the end of this year and the once popular CSI drama series “running out of steam”, audience levels are likely to soon dip meaning any potential new owner would need to invest heavily in order to make it profitable. Allan declined to comment on whether Channel 4 would look to reclaim Big Brother when the contract expires.
Allan added: “To turn it round into something profitable we would want to make it different and, for us, Channel 5 at the moment is a small ITV…[When Channel 5 was initially reportedly valued at £100m] we were looking to make it more of a [distinctive] household and kids channel to make it more competitive…but to make it profitable you would need to invest a lot of money…I’m not sure [at that value], as a publicly owned company that has a remit to invest only in the things that are going to be most profitable in the future, we could raise the funds to do that.”
Other companies also reported to be in line to make a bid for Channel 5 include BSkyB, ITV, Viacom, Discovery Communications, and Scripps, which owns 50 per cent of UKTV.