Channel 5 may sell digital capacity

Channel 5, Britain's newest television channel, is courting controversy by seeking a cash-rich investor to help it shoulder the costs of digital broadcasting in return for a share of its excess digital terrestrial capacity. The move comes just months after Channel 5 pledged to use all its available digital channels.

The company is guaranteed one channel to duplicate its analogue service using digital frequencies. However, it has two channels spare, which it is not keen to invest in.

Senior television sources say that S4C Digital Networks (SDN), the group owned by S4C, the Welsh Channel 4, United News & Media, and NTL, the cable company, is interested in buying some of the spare capacity. Channel 5 could raise over pounds 15m from the sale, according to some industry estimates.

SDN has been awarded the licence for multiplex A, which carries the Channel 5 and S4C digital services and has half of its spare capacity free for new programming. United and NTL were keen to take a stake in SDN after the pair lost their battle for the digital terrestrial licences to British Digital Broadcasting, the consortium owned by Carlton Communications and Granada Group.

David Elstein, Channel 5's high-profile chief executive, is known to want to focus on the company's fledgling analogue service rather than pouring much-needed cash into new digital broadcasting.

A spokesman for the Independent Television Commission indicated that Channel 5's proposals would require the watchdog's clearance.