Government clears way for Murdoch to buy Channel 5

The Government has cleared the way for Rupert Murdoch to buy Channel 5 and fulfil his long-held ambition to own a terrestrial television channel in Britain.

Under the draft Communications Bill published yesterday, owners of British newspapers will be allowed to bid for Channel 5 for the first time. Non-European companies, but not owners of British newspapers, will be allowed to buy other television stations and buy into ITV.

Kim Howells, the Broadcasting minister, said a ban on foreign ownership "has no real logic." Under the old rules, Vivendi, which has a French owner but is based in New York, could bid for Carlton or Granada, but Disney could not, he added.

With the draft Bill making it easier for foreign companies to play a bigger part in the British media, Patricia Hewitt, Secretary of State for Trade and Industry, added that the Government's philosophy was "competition where possible, regulation where necessary".

Mr Howells was asked at a press conference whether the clause allowing newspaper owners to buy Channel 5 would be known as "the Murdoch clause." He replied: "Not if I have anything to do with it."

He justified Channel 5 being treated differently from the other broadcasters saying it was not a mass market broadcaster as large areas of the country could not get it, indeed it was not available in his constituency. He agreed though that it was a public service broadcaster with public service obligations.

David Elstein, the founding chief executive of Channel 5, now a media consultant, said last night: "Just because it's now open to News International to own 100 per cent of Channel 5, it doesn't mean they'll do it."

At the moment, the two shareholders in Channel 5, RTL and United Business Media, have both indicated that they want to buy it.