Channel Four is understood to be in talks with the BBC about the possibility of acquiring the 50% stake in the UKTV television channels business owned by Virgin Media. Quite how Channel 4 would contribute cash is currently unclear. The commercial public service broadcaster has been pleading poverty and the need for special assistance. Instead, the communications regulator Ofcom has suggested that it should seek support through partnerships.
In 2007 Channel Four made a profit of just half a million pounds on a turnover of nearly a billion. The corporation has around £200 million in reserves and a £250 million borrowing facility.
BBC Worldwide, the commercial subsidiary of the public corporation which owns the other 50% of the UKTV business, could contribute cash although its borrowings are capped at £350 million.
UKTV started out as the UK Gold channel in 1992, carrying archive programmes from BBC and Thames Television. It was acquired in 1997 by Flextech, which established a joint venture with the BBC to create a multichannel proposition. Flextech subsequently merged with cable television operator Telewest, which then joined with NTL to create Virgin Media, with Flextech becoming Virgin Media TV.
Virgin Media is understood to be considering options to sell its stake in UKTV. The book value of its holding is reported at £365m, which includes outstanding loans of £136m.
In a statement in response to the Ofcom public service broadcasting review, the BBC Trust said of Channel Four that “Both sides are now exploring the opportunity to commit parts of their current UK businesses to new ventures in order to create new value for both organisations.”
BBC Trust chairman Michael Lyons said: “Partnerships can certainly include joint ventures and they can include the creation of new companies that bring together existing assets. What is important is that, actually, we are clear who is investing and whose assets are at work here.”