Channel 4 and Five pull out of merger talks

Channel 4 and Five have called off merger talks, citing "commercial and cultural" obstacles, they announced yesterday.

Channel 4 and Five have called off merger talks, citing "commercial and cultural" obstacles, they announced yesterday.

Both broadcasters claimed they had chosen to pull out of the talks but agreed that the incompatibility of Channel 4's public service remit and Five's commercial outlook were at the heart of their decisions.

The Five board said a deal would have been too messy. A statement said: "Although the benefits of a merger would have been significant, the shareholders have come to the conclusion that the complexity of combining a commercial and a publicly owned entity, and the constraints on the likely structure, would have been too great, and have therefore ended the discussions."

The idea of merging the two channels was first mooted by Mark Thompson, the former Channel 4 chief executive, as a solution to the broadcaster's financial problems. The channel, owned by the government but funded by advertising revenues, is facing an estimated £100m annual funding shortfall following the switch to digital television.

However, Andy Duncan, who took over at Channel 4 when Mr Thompson left to become director-general of the BBC, decided there was too great a risk that a merger would "dilute" Channel 4's public service remit, according to insiders.