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Is UK broadcaster Five about to become ITV Five?

By Andrew John     Apr 27, 2010 in Entertainment
UK television network ITV is reportedly considering a shock takeover of fellow commercial company Five as part of a fresh strategy being developed by new chief executive Adam Crozier.
Past negotiations between Five and ITV – which already runs ITV1, ITV2, ITV3 and ITV4 – over establishing greater links between the two broadcasters, have come to nothing. But, according to The Times, insiders believed that Crozier, who takes over officially at ITV this week, views consolidation of the two commercial independent television stations as inevitable in the current climate where advertising revenues face long-term decline.
If the takeover goes ahead, ITV would gain an additional 8 percent of the UK advertising market – which is expected to see a year-on-year growth of 10 percent in 2010 – and, crucially, cut its operating costs by around £100 million. However, as the new group would then control over half the television advertising market, such a deal would probably face competition concerns.
In March, the current owners of Five, the Luxembourg-based RTL Group, reported that the broadcaster had made a loss of €41 million (£35 million) last year, as its revenues fell 30 percent year-on-year to €303 million.
Subsequently, Gerhard Zeiler, RTL’s chief executive, claimed that the Five’s future value rested as an asset in the expected consolidation of the UK television industry. However, Zeiler, who is thought to prefer a long-rumoured merger with Channel 4, met its chairman, Terry Burns, and incoming chief executive, David Abraham, last month to discuss possible options for a deal. Rumours of such a merger have surfaced on and off since 2004, with a three-way merger between Five, Channel 4 and ITV being mooted in 2009.
Some TV industry sources have expressed doubt over ITV’s taking over Five, instead believing that Crozier’s strategy will involve refocusing ITV’s production operation, enabling it to produce programmes that will be a hit, for sale around the world.
Background
ITV, which is the oldest commercial network in the UK, was set up by the Independent Television Authority (ITA) to provide competition to the BBC as a result of the Television Act (1954), and began broadcasting in 1955.
ITV PLC, of which Adam Crozier is chief executive, is the company that operates 11 of the 15 regional television broadcasters that make up the ITV network. It was created by the merger of Granada and Carlton in 2003, and, since 2001, has been branded as ITV1. ITV2, ITV3, ITV4 and CITV (Children’s ITV) are all wholly owned digital channels of the network.
Five was launched as Channel 5 in 1997. The broadcaster was rebranded as Five in 2002. Five was originally owned by Channel 5 Broadcasting Limited, and the RTL Group acquired it in 2005. In 2006, Five launched two digital channels in the UK: Fiver (originally called Five Life); and Five USA (originally Five US).
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