C4/BBCW eyes annual profits of $300 mil

House of Lords hears details of commercial partnership

LONDON -- The proposed partnership between Channel 4 and BBC Worldwide could have revenues of £800 million ($1.2 billion) a year and profits of £200 million ($304 million) BBC Worldwide chief executive John Smith said Wednesday.

Speaking before a House of Lords select committee, Smith said the venture would see the BBC's commercial arm merge some of its U.K. operations -- including its 50% stake in the UKTV pay TV channels business and its 60% stake in DVD business 2Entertain -- into a jointly-owned and managed company operated by BBC Worldwide and Channel 4.

BBC Worldwide's portfolio of global networks including BBC America, and its international production and program distribution operations would not be involved in the deal.

BBC Worldwide is currently in the process of buying out its current partners in the UKTV and 2Entertain businesses, giving it 100% control of the operations, which could be incorporated alongside such Channel 4 assets as digital channels More4 and E4.

But the BBC Worldwide boss reiterated his opposition to an all-out merger between the two organizations, saying such a merger with government-owned Channel 4 would be a bad idea.

"I have not participated in a single discussion that implies a merger is on the cards. I don't think it would be a good idea," he told the committee.

"I personally believe the very best ventures are formed when two organizations are going to get something out of it," he said. "But it is my history and nature that I will try and make anything work."

An announcement on the planned new venture is expected within the next few weeks, but will be subject to government approval.

"We are agreed on all the things that would really matter. There is not much fundamental disagreement, just a few things we haven't run to ground," said Smith.

"To enact it we need a fair bit of government support and we don't know what is coming up in the next few months," he added.

On Tuesday Channel 4 chief executive Andy Duncan said the agreement was "weeks away."