U.K.'s Channel 5 Explores IPO as Auction Continues

Press Association (PA)
Channel 5 owner Richard Desmond

Discovery Communications, Viacom and Scripps Networks have been in the running for the British broadcaster, which has targeted a price tag of around $1.16 billion.

U.K. media mogul Richard Desmond is exploring a possible stock market listing of British broadcaster Channel 5 as a potential alternative to a sale, Sky News reported Monday.

The news comes as the auction process for the broadcaster continues. Discovery Communications, Viacom and Scripps Networks have been in the running for Channel 5, according to sources. U.K. pay TV giant BSkyB has also looked at the asset and considered a joint bid with Discovery.

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Sky News, part of BSkyB, in which Rupert Murdoch's 21st Century Fox owns a 39 percent stake, reported that a total of more than 20 suitors have looked at Channel 5 and seven bidders remained as of the end of last week, but it didn't list them all.

The auction, which is believed to remain Desmond's main focus, is expected to further narrow down the field in the coming weeks, but the timing of the process isn't fully clear at this stage.

Early this year, Desmond hired Barclays to run the auction with a target of fetching $1.16 billion-plus (£700 million). Haim Saban's Saban Capital previously dropped out of the Channel 5 auction, with sources saying it felt the price expectations were too high. One banking source said Monday that the exploration of an IPO of Channel 5 gives Desmond more options should the auction not meet his price expectations. News of the possibility could also put pressure on suitors, that source said.

Sky News said that investment bank Goldman Sachs pitched the possible IPO to Desmond, who has never headed up a publicly traded company.

Channel 5 airs such hit shows as Big Brother and CSI. Desmond's Northern & Shell acquired it in 2010 for $172 million (£103.5 million). 

For the first half of fiscal year 2013, Channel 5 swung to a profit of around $34.3 million from a $26.8 million loss a year earlier.

A Channel 5 spokeswoman declined to comment. Companies in the bidding have also been declining comment.

Email: Georg.Szalai@THR.com
Twitter: @georgszalai