RTL chief 'wants Channel 4, Five tie-up'

Gerhard Zeiler, chief executive of Five-owner RTL Group, has reportedly made a fresh approach to Channel 4 about a commercial partnership between the two broadcasters.

According to The Guardian, Zeiler met with Channel 4 chairman Terry Burns and incoming chief executive David Abraham earlier in the month to discuss details of a potential tie-up.

Zeiler, who recently said that Five's value rests as an asset in the future consolidation of the UK media industry, also mooted a resurrection of merger talks between Five and Channel 4.

However, any formal merger would appear unlikely compared to a commercial partnership of some description, such as a joining of the two broadcasters' airtime sales operations.

When asked about the meeting, a Channel 4 spokesman said: "David Abraham has not yet joined Channel 4 as chief executive and is currently overseas. He will be reviewing strategic options for the group once he has taken up his post."

A spokesman for RTL added: "We don't comment on any specific rumours. In principle we have said in the past that everyone is meeting everyone."

The concept of a merger between Channel 4 and Five has been proposed on two previous occasions, 2004 and then late 2008, but nothing has ever materialised. The government also suggested that the two sides should discuss the idea as part of its Digital Britain campaign.

Just over a year ago, Zeiler said that it "makes sense" for Five to be merged with Channel 4, while Five chief executive Dawn Airey has also previously been receptive to such a deal.

During their tenure, Channel 4's former chief executive Andy Duncan and chairman Luke Johnson strongly opposed such a deal as it would bring together commercial and not-for-profit firms with conflicting aims.

However, the new management team of Burns and Abraham could be more receptive to the situation as a way to build stability in the UK broadcast industry.

"The possibility of a Five deal is still alive - as I understand it, David [Abraham] is really interested in making something happen," said a senior TV industry executive.

"Forget ideological differences, now it is about does it make business sense or not."

Earlier in the month, RTL revealed that it had written down Five's value by over half due to tough operating conditions last year in the UK industry. The broadcaster posted a loss of €41m (£36.7m) for 2009 as revenues dropped 30%, but it was also able to cut costs by £65m, mainly due to programme savings.

An airtime sales merger with Channel 4 could help Five better compete in the tough advertising market while also cutting staff costs, but such a tie-up would most likely trigger a competition investigation.

Other consolidation options for Five could be deals with ITV or US broadcaster NBC Universal. Channel 4 is also thought to be considering taking a stake in Dave-owner UKTV.