[Red Moon]

Channel 4 could merge with BBC Worldwide to stop it going bankrupt

Television regulators are reportedly in discussions to merge Channel 4 with the profitable BBC Worldwide to save it from going bankrupt.

The move would see the creation of "4 Worldwide" and represent a huge financial sacrifice for the BBC.

However, it would generate the £100 million a year that Ofcom have calculated that Channel 4 needs to survive.

BBC Worldwide made profits of £112.5 million last year and owns the Radio Times and BBC DVDs, all of which would be transferred to the hybrid broadcaster.

Channel 4 would run the business, with the BBC retaining a minority stake. Both broadcasters are publicly owned, although Channel 4 funds itself through advertising. BBC Worldwide draws no money from the £3.4 billion licence fee.

There are signs that the scheme, reported in The Times, could run up against political opposition. John Whittingdale, MP, chairman of the Culture Media and Sport Select Committee, said: "This is essentially a plan aimed at taking public money surreptitiously, because it take profits away from the BBC, and forces the licence fee to go up. But I know Channel 4 is keen on it, because it thinks that it would be difficult for it to justify taking public money directly."

The BBC will present its plans, aimed at heading off the loss of Worldwide on Thursday, which will include a series of "commercial partnerships" with ITV, Channel 4 and other broadcasters. But those plans are likely to be rejected by Channel 4 as insufficient.

Channel 4 is still profitable, but it risks going under in the next five years because it can no longer generate enough advertising to support the "distinctive" mix of programming, from Big Brother to Dispatches, that it was created to provide. Last year it made a profit before tax of £1.6 million.

Ofcom estimates that Channel 4 needs up to £100 million a year to survive for the next decade, but Channel 4 says that it requires up to £150 million a year.

A decision on Channel 4's future should be made by the middle of next month and Ofcom will make a public recommendation to ministers.

Source: Daily Telegraph