Channel 4 Takeover - Deadline; Channel 4 For Sale: ITV, Comcast, Discovery, Paramount & Outside Bet Vivendi All Touted As Sales Process For ‘It’s A Sin’ Broadcaster Gets Underwa

Story from Deadline:

ITV, Comcast, Discovery and Paramount have been tipped as potential Channel 4 buyers, along with outside bets such as European giant Vivendi, as the UK government’s two-year-long process to privatize and sell the broadcaster begins.

Sources indicated each potential bidder will be scrutinizing the process in minute detail to see how Channel 4’s all-important remit will change. If given the opportunity to own the rights to its shows for the first since its 1982 foundation, the network becomes quite a prospect.

Deadline has spoken to several within and outside of Channel 4 to get a feel for who may be interested in acquiring when it hits the sales block, with the government valuing at £1BN ($1.3BN) when news of the controversial privatization was leaked earlier this week. Some sources have questioned the value, pointing to a lack of cost benefit analysis from the government.

The UK’s largest commercial broadcaster, ITV, is an obvious starting point and adding Channel 4 to its roster would be another string to the bow in the shape of a youth-skewing, alternative channel that has been responsible for hits including It’s a Sin and Gogglebox.

If it were to bid, one Channel 4 insider suggested ITV would be keen to keep it as distinct as possible.

“Channel 4 is a very powerful brand, you get access to a whole load of 16-24 year olds, so ITV wouldn’t want to destroy that brand and I imagine would keep them very separate,” added the insider.

Sources flagged competition concerns, however, due in part to the circa-70% of the ad market ITV would occupy if it were to acquire Channel 4. A similar situation in France, where public broadcasters M6 and TF1 are currently jumping through regulatory hoops to merge, has proved hugely controversial.

“This would have a seismic impact on competition and I don’t know how the UK regulators could accept it,” added a former senior Channel 4 exec.

Sky-owner Comcast was touted by several but may experience similar difficulties.

Sky has ad sales deals in place with Channel 5 and UKTV and would therefore occupy more than half (55%) of the market if Channel 4 were added. This could lead to a tussle whereby both ITV and Sky bid to stop the other from dominating the market, the ex-Channel 4 exec suggested.

One industry source pointed to the strength of pre-existing ties between Sky and Channel 4 in areas such as sport, while their respective UK CEOs Stephen van Rooyen and Alex Mahon are understood to have a good relationship, but they questioned whether Channel 4 fits within Comcast’s business model for Sky, which is producing more of its own shows and opening studio space.

Notably, UK Prime Minister Boris Johnson is being advised on the process by Andrew Griffith, a director of his Number 10 Policy Unit who used to be Sky’s Chief Financial Officer and has extensive knowledge of the sector. Griffith himself was heavily involved with a failed plan 15 years ago to merge Channel 4 and Sky’s advertising teams in the wake of the global recession.

Elsewhere, David Zaslav’s Discovery is occupied with the WarnerMedia merger about to complete but bidders won’t realistically be submitting bids for more than a year and Zaslav by that point may be tempted.

“Zaslav has a bit on his plate but he can make crazy decisions and Channel 4 is exactly the sort of network he would be looking at,” said the former Channel 4 exec, several months after reports emerged that Discovery was holding informal conversations about the acquisition.

The U.S. media giant is however in the early stages of forging a JV with BT Sport in the UK, giving it access to a wealth of mainstream sports rights, which could push Channel 4 down the priority list.

And then there is Paramount, which has done a fine job with thriving UK linear operation Channel 5 and could attempt to replicate the experience with a larger, more globally-renowned network.

Looking beyond the U.K. and U.S., leading media voice Claire Enders, who runs Enders Analysis, suggested certain European powerhouses such as Vivendi, which controls one third of key Channel 4 supplier Banijay, and RTL parent Bertelsmann, which owned Channel 5 between 2005 and 2011.

Both own numerous media assets across Europe and a footprint in the thriving UK market may be tempting.

Enders and all sources agreed the crux of the matter is how Channel 4’s government-set remit can be adapted to allow it to produce programs in-house and own the rights to these shows.

If this were to be the case, Channel 4 would swiftly become a more attractive proposition while production companies would lose out.

“The outcome will drive the net result and identity of Channel 4’s suitors,” added Enders, who predicted UK producer trade body Pact will “fight this every inch of the way” on behalf of its members.

Documents obtained by the Financial Times yesterday revealed Channel 4’s failed alternative plan to ward off privatization involved creating a joint venture from which it could attract private investment and benefit from such secondary sales rights.

Channel 4 is playing the waiting game now and buyers have a little while to examine the process and prepare bids.

The legislation to privatize the network will be introduced on May 10 but its passage through parliament will take 12 to 18 months, during which time it is likely to face fierce scrutiny from the opposition Labour Party, House of Lords and some Conservative politicians who have already come out against the move.

Question marks remain over the point at which potential buyers will be given the greenlight to submit bids and whether this could happen before the legislation officially passes to make for a quicker post-privatization sale.

“The government will want to lock down our [new] remit before the beauty parade starts,” said the Channel 4 insider.

During a town hall-style meeting with staff Tuesday, around 24 hours after her internal email leaked to the press, Channel 4 CEO Mahon reminded employees the process could take up to two years and therefore the day-to-day remains business as usual.

She thanked them for their hard work, Deadline understands, in a heartfelt address that spotlighted recent successes such as Channel 4’s impressive haul of 44 BAFTA TV nominations.

Channel 4 has been a political football for a long while and sometimes it’s easy to forget about the content. Potential buyers will do well to keep this in mind.

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