Murdoch 'in talks to acquire stake in Channel 5'

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The Independent Online

Rupert Murdoch's long-cherished ambition to own a terrestrial television station in Britain could soon be realised with the acquisition of a stake in Channel 5.

The media mogul's BSkyB pay-television company is reported to have spent the past month in talks with Channel 5, which has achieved a 5.8 per cent share of the British audience with its diet of football, films and sex.

Some of Channel 5's present investors would eventually like to sell their stake so long as they could do so at the right price. The most likely vendor would be Lord Hollick's United Business Media, owner of 35 per cent of Channel 5.

The channel's audience share has been achieved even though it is not yet available in all parts of the UK. Dawn Airey, its chief executive, said last month that she was confident of reaching 6 per cent by the end of the year. Its next goal is to beat Channel 4, which currently has a 9 per cent share of the total audience.

But with a serious downturn in advertising revenue hitting commercial television, and the proliferation of cable and satellite channels, including the likely addition of two new digital channels from the BBC, Channel 5 might struggle to grow without further investment.

Channel 5's majority shareholder is RTL, a Luxembourg-based television company that is owned in turn by Bertelsmann, a German media group, with 67 per cent, and Pearson, the publisher of the Financial Times, with 22 per cent.

The recent appointment of Kevin Lygo, formerly the head of entertainment at Channel 4, as director of programmes at Channel 5, has been widely interpreted as signalling a likely move upmarket as it tries to reach new viewers.

Yet its much smaller budget precludes any substantial investment in ratings winners such as heavyweight drama. If BSkyB succeeded in taking a stake in Channel 5, Sky News would be likely to take over the contract to supply the station's news from ITN.

Nobody was available for comment yesterday at BSkyB and Channel 5.

Rupert Murdoch lost the bidding for the Channel 5 licence when the station was launched. Any attempts to gain a foothold now would cause consternation in political circles. His existing influence over the British media is viewed with suspicion in many quarters.

In addition to the newspapers published by News International, in which his family has the biggest single shareholding, The Times, The Sunday Times, The Sun and the News of the World, the company also owns a 37.5 per cent stake in BSkyB.

Concerns at the wider effects of Mr Murdoch's media expansion in Britain were thought to be behind the Department of Trade and Industry's decision to reject his proposed purchase of Manchester United Football Club in 1999.

His ambitions continue to attract regulatory attention. BSkyB is being investigated by the Office of Fair Trading after ONdigital, a rival pay-television operator that was relaunched last month as ITV Digital, complained of unfair pricing. The OFT, which recently put back the deadline for the inquiry, said there were "reasonable grounds" to suspect that BSkyB had acted anti-competitively.

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