U.K.'s Channel 5 Owner Mulls Possible Sale

Richard Desmond - Headshot - H - 2011
Press Association (PA)

UPDATED: British TV and telecom giants and Time Warner's Turner unit are mentioned as companies that could consider a bid.

The owner of U.K. broadcaster Channel 5, which airs such shows as the local version of Big Brother, is considering a sale of the channel.

The Financial Times first reported the news, saying that a sale could come for a targeted price tag of $1.15 billion-plus (£700 million), but THR understands that the current owner could look for as much as $1.64 billion (£1 billion).

One market observer explained that Channel 5 could draw such a high price tag because of recent TV deals in the U.K. and broader European markets from the likes of Liberty Global and Discovery Communications, which show an appetite for assets in the market. Analysts also have projected continued health in the U.K. TV advertising market.

A bid for U.K. broadcaster ITV, whose market value stands at around $13 billion, would be much more expensive and difficult than one for Channel 5, while public broadcasters BBC and Channel 4 are public assets and therefore not available for takeovers, explained one banker.

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The FT mentioned ITV and Time Warner's Turner unit as possible suitors for Channel 5, but ITV could face regulatory issues. One industry observer also mentioned Discovery Communications, which has made acquisitions in Europe over the past year, John Malone's pan-European cable giant Liberty Global and telecom giants, such as Vodafone, as companies that could take a look.

Turner's international arm is led by former RTL boss Gerhard Zeiler. TW's upcoming spinoff of the Time Inc. publishing arm will focus the company's operations on its film and TV units.

A representative for ITV, which has been buying TV production firms in the U.K. and U.S. to diversify its revenue streams beyond TV advertising, said: "We don't comment on speculation." TW and Discovery weren't immediately available for comment.

Barclays has been hired to advise current owner Northern & Shell, led by entrepreneur Richard Desmond, as financial advisers, according to the FT report. He had bought Channel 5 in 2010 for $171 million from German media giant Bertelsmann's RTL Group. Barclays declined to comment.

"As a media group with a broad portfolio of assets, we are often the subject of speculation, but it remains our policy not to comment on these matters," Northern & Shell told the FT. A spokeswoman declined to comment further.

The Channel 5 family of networks drew a 2013 audience share of 6.13 percent in 2013 in Britain.

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