The global media company behind Discovery Channel has emerged as the front-running candidate in the race to buy Channel 5 from Richard Desmond, as it plans a British expansion which could include bidding for high-profile football coverage.
The terrestrial channel has been on the market since Mr Desmond’s publishing empire, Northern & Shell – which owns Channel 5 – instructed its bankers Barclays early this year to seek potential bids of up to £700m for a network which he bought in 2010 for £103.5m. A second round of bidding is due to end next Monday, with five interested parties remaining from the 20 who initially expressed interest. Discovery Communications, owned by the US mogul John Malone, is in pole position in a joint bid with BSkyB, a distributor of its channels in the UK.
Other potential buyers include the US media giants Viacom, which owns MTV and Nickelodeon, and Scripps Network Interactive, which owns half of UKTV.
Speaking in New York, senior Discovery executives told The Independent of the company’s plans for further expansion in the UK, its biggest international hub, and its intention to compete for major sporting rights through its newly acquired Eurosport business.
Read more: Ian Burrell: If the Discovery Channel buys Channel 5, it could transform the British television market
Jean-Briac “JB” Perrette, the new president of Discovery Networks International, said: “The UK, thanks to the tax and economic incentives that the Government has helped spur, has been a leader for Europe in the turnaround and we have benefited from that. The marketplace looks very vibrant and we look at growing in that marketplace.”
Mr Perrette said Discovery was looking for “new channels and flagship brands”. Asked about the company’s interest in Channel 5, he said: “We are looking to continue to grow our footprint in the UK, which is a market of great interest to us. It’s not surprising that Discovery will be rumoured to be looking at all sorts of things.”
Discovery has annual revenues of $4.5bn (£2.7bn) and has spent the past 18 months on a programme of acquisition, buying the Nordic broadcaster SBS and France-based Eurosport – which enables it to become a powerful player in bidding for sports rights, including those for England’s Premier League. Allying with Discovery offers BSkyB options in competing with its big-spending pay-TV rival BT. Mr Malone has always been regarded as a fierce rival of the Sky founder Rupert Murdoch, but the Discovery president and CEO David Zaslav is friendly with Mr Murdoch’s sons James – the former BSkyB CEO– and brother Lachlan, both recently appointed to new senior positions at the top of the family empire.
Discovery has expanded its UK operation rapidly and now has nearly 1,200 staff based in London. Mr Perrette said the distribution relationships with Sky and Virgin were “incredibly important and will be a big priority for us”.
Historically, Discovery was seen as a pay-TV business, but in recent years has shown increasing interest in growing its audiences through free-to-air platforms, which suggests that Channel 5 would be an attractive buy.
Dee Forbes, head of Discovery in Western Europe, said the media giant was ready to make further acquisitions and was working with over 70 British production companies. Ms Forbes described Discovery’s acquisition of Eurosport – which previously specialised in pan-European tennis, cycling and winter sports – as “very strategic”. She said: “If it makes sense in certain markets we will invest in more rights.”