Written by Sport, TV

Possible Sale of Channel 5

In recent days it has been fairly widely reported that Richard Desmond, owner of Channel 5, Express Newspapers and other more “specialist” TV services, is looking to sell Channel 5.

Desmond bought Channel 5 for a knockdown price of £103.5m in 2008, and he’s run it pretty shrewdly, keeping costs down and turning a profit. Now there’s a suggestion that either Sky or BT might want to wade in and buy the service for as much as £700m.

On Radio 4’s Media Show yesterday, Steve Hewlett interviewed David Elstein who was Chief Executive at the channel’s launch. Elstein pooh-poohed the idea that either Sky or BT would buy it, suggesting that it doesn’t really fit into their strategies. Would either company need to pay such a high price? He suggested that an American such as NBCUniversal might be a likelier bet at a price significantly lower than £700m

But I wonder if Channel 5 wouldn’t be such a smart buy for either Sky or BT? In a bullish interview in November last year, BT’s Marc Watson suggested that FIFA might want to come and have a chat with him about free-to-air World Cup rights.

And the fact is that ownership of Channel 5 would enable BT or Sky to bid for those rights, without any changes in the law. As things currently stand, there are a number of blue-riband sports events that must appear on free-to-air television – the “Listed Events.” Assuming that the Government is not in a rush to look at changing the rules surrounding these events any time soon – and pre-election, that feels unlikely – then as things stand neither BT nor Sky could bid for those events without the help of a third party broadcaster.

Because although Sky ran free-to-air Ashes highlights of the recent abysmal series on Pick TV, that service doesn’t have enough coverage to meet the so-called “qualifying conditions” (Annex 2) of being a service approved to be able to carry free-to-air rights for Listed Events.

Currently, the only approved channels are BBC1, BBC2, ITV, Channel 4 and Channel 5. Other services simply don’t reach the whole of the UK, and therefore the criteria to be able to carry a crown jewel event like the World Cup. For example, the majority of channels on Freeview reach about 90% of the population which isn’t good enough to meet those qualifying conditions.

If BT or Sky were to buy Channel 5, then all of sudden they could bid for World Cup, Euro, Wimbledon, Six Nations and other rights. Yes they’d need to monetise them via advertising rather than subscription, therefore reigning in what they could sensibly bid. BT has said it’ll show a number of Champions’ League games free-to-air when it takes over the rights in 2015. Channel 5 would be an obvious outlet. They could show occasional free-to-air taster fixtures to persuade consumers to subscribe. And position 5 on an EPG is not to be sniffed at.

The whole thing could have major repercussions on how sport is broadcast in the UK.