We’ve known for some time that one way out of Channel 4’s £100 million annual shortfall could be some kind of combination with BBC Worldwide. The pair are now talking about letting C4 start a new company that would comprise some BBCWW assets and could earn £500 million, FT.com says. The new entity would see C4 pay for BBCWW’s 50 percent stakes in the UKTV channels and Woolworths’ 2Entertain DVD distributor, along with some other BBCWW assets, the story goes.
This is all highly speculative and pre-empts the outcome of Ofcom’s public service broadcasting review, due to report in the new year. But the stars are in alignment – Virgin Media (NSDQ: VMED) has reportedly been considering selling its content-making VMtv division, which owns the other half of UKTV; Woolworths’ imminent collapse means a likely sell-off for 2Entertain (just begging to be renamed 4Entertain?) and BBC Worldwide is facing growing calls for curtailment.
Ofcom’s review had proposed four options to sustain public service: 1) reducing public obligations to BBC only, 2) evolving the current model, 3) focusing on BBC and C4 as public broadcasters with some competitive funding available to the others, and 4) competitive funding available to all. Having discarded the BBC-only option, and with broadcasters facing falling income, the BBC/C4 option may indeed look likely, and could lead to ITV (LSE: ITV) being freed from some of its public service obligations.