Greg Dyke On Broadcasting

What now for Channel Four after collapse of merger deal?

The plan to merge Channel Four and Five was always a pretty daft idea given that one party is a publicly owned trust committed to public service broadcasting and the other is a commercial broadcaster worried about its long-term viability.

The plan to merge Channel Four and Five was always a pretty daft idea given that one party is a publicly owned trust committed to public service broadcasting and the other is a commercial broadcaster worried about its long-term viability.

How could you combine a trust and a commercial company and convince anyone that the result wasn't a commercial business? Such a move would inevitably have been seen as the privatisation of Channel Four by the back door, which, I suspect, would have led to its privatisation by the front door.

So last week's decision by the Channel Four board to put the plan out of its misery was long overdue. In fact I suspect the merger idea was as good as dead from the moment Mark Thompson left to take over at the BBC and was replaced by Andy Duncan. Mark was the merger's biggest champion inside Channel Four and he was never a supporter of the channel taking public money. But Andy Duncan is, and he knew that the Four/Five tie-up would make that impossible.

The problem is that both stations are now left wondering what the future holds. In the digital multi-channel world, it's possible that both will struggle. It is certainly unlikely that a stand-alone Five will survive on its own. Back in the mid-Nineties when we were planning Channel Five - I was its chairman - we always believed that, long term, the channel would have to be part of a larger group.

There has always been a belief that BSkyB would eventually end up owning Channel Five, but I suspect that's less likely today than it was a few years back. Any move by BSkyB to buy Five would create an enormous political furore, and might not be allowed under the plurality test that Lord Puttnam put into the last Communications Act. And given that it wouldn't make much difference to the size of their overall business, why would BSkyB bother?

The logical buyer for Five is ITV, but I doubt whether its present leadership possess the long-term mindset that such a deal would require. It certainly wouldn't enhance ITV's earnings or share price in the short term, but over time it could prove very exciting. Of course there would be competition and regulatory issues - would such a merger be deemed anti-competitive? But the idea of ITV controlling two major channels, and commissioning and scheduling them as a unit with a single back office servicing both, has to be an exciting business idea even if the advertising would have to be sold separately for competition reasons.

I am told that now the Channel Four negotiations are over we should look out for radical news from Five next year. As for Channel Four, it has to be careful about pleading poverty too early. Many people believe its best days were a decade or so ago, when its income was far less than it is today. In the years between 1995 and 2000 Channel Four's income grew by something like 14 per cent per annum, which led to massive expansion. It also owns its London headquarters outright now, so its overhead costs are low. Ofcom is probably right when it says that Channel Four can easily survive in the medium term.

The difficult questions now surround the future of Channel Four after switch-over in 2012. Its ratings are already below those of Five in Freeview homes, so by 2012 Channel Four's share of the total audience could be down to less than 8 per cent. Its income could fall at the same rate, especially if the advertising industry realises between now and then that spending vast sums chasing young audiences is perhaps not such a good idea. This is the scenario under which Channel Four says it might need public funding to help it fulfil its public service remit. Only last week, Andy Duncan, in a brochure sent out to the great and good, said that Channel Four and Ofcom need to agree how to "future-proof" the Channel in case its money runs short.

So all the Government and Ofcom have to do in the short term is ensure that legislation is put in place that will allow Channel Four to receive financial help from the public purse should it become necessary. Then they just have to wait to see whether the prophets of doom within Channel Four turn out to be right.

Fergie admits interview fixing

Sometimes I wonder about Sir Alex Ferguson. As a lifelong Manchester United fan and a former director of the club, I can only admire what he has achieved at Old Trafford. But his relationship with the media, and in particular the BBC, has always been tense. Earlier this season he decided that he wouldn't give any interviews to BBC Sport for three months after BBC Three ran a documentary called Fergie and Son about the involvement of his son Jason, a football agent, in a series of deals done by Manchester United. The club has since said Jason cannot be part of any deals involving its players. A couple of weeks back, Niall Sloane, who is in charge of football for BBC Sport, rang United to enquire whether the ban was over, only to be told that Sir Alex had changed his mind and that the ban was now for life! Football people have never understood that news and current affairs reporters do a different job to the sports teams, who, quite rightly, cannot influence their programmes. Given the current boardroom struggles at United between the US tycoon Malcolm Glazer and the Irish investors John Magnier and JP McManus, shouldn't someone sort this out? Why don't the United board just tell Ferguson to cooperate? After all, they might need every friend they can get in the near future.