Channel 4 link with BBC backed by Culture minister

Burnham favours possible merger with BBC Worldwide
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The Independent Online

Channel 4 was in triumphant mood yesterday after a government minister set to rule on the broadcaster's future threw his weight behind its preferred option of a merger with the BBC's commercial arm. This brought a U-turn from the BBC, which admitted a tie-up was a possiblity.

Andy Burnham, the Culture Secretary, told a media convention that considering a tie-up with BBC Worldwide – C4's preferred option to shore up its forthcoming funding financing crisis – was the right place to start. He said: "It makes sense to begin by looking at public sector bodies: Channel 4 and BBC Worldwide. Of course it is early days, and any successful partnership model needs to continue to meet the needs of the BBC as well as releasing value and resource to create a new model with Channel 4."

Mr Burnham and Peter Mandelson, the Business Minister, commissioned the Communications minister, Lord Carter, last year to present a report on bringing Britain into the digital age. A cornerstone of the report, to be announced on Monday, is the future of C4.

Sir Michael Lyons, chairman of the BBC Trust, was at the convention run by the Institute for Public Policy Research yesterday. In more conciliatory tone to the BBC's previous stance on such a tie-up, he said: "Partnerships can certainly include joint ventures and they can include the creation of new companies that bring together existing assets." However, he noted, "It couldn't be right, could it, for the BBC to play the role of Lloyds bank?", in a reference to Lloyds TSB's government-sponsored rescue of HBOS.

C4's boss, Andy Duncan, said he supported the "view that partnership is the way forward and agrees that it makes sense to look at C4 and BBC Worldwide creating a new model".

Talks have been ongoing for "some time" between C4 and the BBC over the possible tie-up of all or part of Worldwide, according to a source close to the negotiations. "They remain ongoing despite some indications to the contrary," the source added.

BBC Worldwide's assets include a magazines business which publishes Top Gear and Radio Times, 50 per cent of UKTV alongside Virgin Media, as well as 2Entertain, a joint venture with collapsed retailer Woolworths. It also markets BBC show formats worldwide. Reports emerged last night that the BBC and C4 were in talks with Virgin to buy it out of UKTV.

Mr Burnham said yesterday that diverting the money earmarked for the digital switchover was a possibility, and even admitted "top slicing" the licence fee was on the table, although it was an unlikely outcome. "I'm not taking options off the table, it would be foolish of me to do so," he said, before adding: "It's one of the things I would reach for last."