BSkyB, BT, ITV and others thought to be considering offers – but questions remain over programming deals and ad sales
Richard Desmond is calling for prospective suitors to submit bids for Channel 5 by the end of next week, although some would-be buyers have concerns over details on issues such as programme deals and advertising sales.
Companies thought to be taking a look at Channel 5 include BSkyB and BT – which are weighing the strategic importance of the free to air broadcaster in their high stakes pay-TV war – ITV and US companies Time Warner, Viacom, Discovery and Scripps, which owns 50% of UKTV.
BT and one other potential bidder are understood to have held private discussions with Desmond last year, with a public sale process pursued after talks petered out.
NBC Universal, previously considered to be an interested party, is now considered an outside contender following parent company Comcast's decision to focus on pay-TV with its $45.2bn deal to buy arch-rival Time Warner Cable in the US.
The information memorandum issued by Desmond's Northern & Shell on Channel 5, sent out to a wide range of media companies and private equity players putting the case for a £700m Channel 5 price tag, has set a deadline of 27 February for interested parties to submit a letter of intent with an indicative, non-binding offer.
The document, which runs to well over 100 pages, has left some recipients with more questions than answers. "There is a lot of information but not a lot of detail at this point, which makes it hard to get a view on the sustainability of the profitability of the company," said one source.
One person familiar with the information memorandum (IM) said that it was "very light" on detail about the state of a number of Channel 5's key programming and content deals.
There are concerns about the key Crime Scene Investigation franchise, a big rating staple on Channel 5's schedule for more than a decade, as it begins to wind down on-screen.
In 2007 Channel 5's former owner RTL splashed out £300m to grab Neighbours from the BBC.
The 10-year deal is understood to have been one of a number of contracts renegotiated when Desmond stumped up £103.5m to buy Channel 5 in 2010, but it is understood the IM provides little insight.
Another issue is establishing the extent to which Northern & Shell – which owns the Daily and Sunday Express, Daily Star and Daily Star Sunday as well as OK! – has boosted the performance of Channel 5.
"There has been an amazing turnaround at Channel 5, especially in its ad sales operation, that is self-evident," said a second person who has thumbed through the IM. But this source added that the amount Northern & Shell spends on Channel 5 advertising had to be taken into account.
Channel 5's TV ad sales operation brings in about £350m a year, easily outperforming rivals with double-digit growth annually for the last few years, with Northern & Shell spending an estimated £30m.
Any prospective buyer will also have to gauge the value of free publicity Channel 5 gets from Desmond's newspapers, as well as the advantages the broadcaster's sales team has had in being able to leverage cross-media deals with advertisers.
Heavy cost-cutting, rejuvenating Channel 5's TV ad sales operation and securing Big Brother have all been factors in an impressive turnaround from a £48m loss when Desmond took over Channel 5 in 2010 to a £20.6m profit in the six months to the end of August last year.
This is remarkable given that Channel 5 has been loss-making for most of its existence since launching in 1997.
But the significant question is whether it can maintain this profit growth. Desmond is seeking £700m for the business, on the basis of 10 times profits estimated at £70m this year.
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Richard Desmond is calling for prospective suitors to submit bids for Channel 5 by the end of next week, although some would-be buyers have concerns over details on issues such as programme deals and advertising sales.
Companies thought to be taking a look at Channel 5 include BSkyB and BT – which are weighing the strategic importance of the free to air broadcaster in their high stakes pay-TV war – ITV and US companies Time Warner, Viacom, Discovery and Scripps, which owns 50% of UKTV.
BT and one other potential bidder are understood to have held private discussions with Desmond last year, with a public sale process pursued after talks petered out.
NBC Universal, previously considered to be an interested party, is now considered an outside contender following parent company Comcast's decision to focus on pay-TV with its $45.2bn deal to buy arch-rival Time Warner Cable in the US.
The information memorandum issued by Desmond's Northern & Shell on Channel 5, sent out to a wide range of media companies and private equity players putting the case for a £700m Channel 5 price tag, has set a deadline of 27 February for interested parties to submit a letter of intent with an indicative, non-binding offer.
The document, which runs to well over 100 pages, has left some recipients with more questions than answers. "There is a lot of information but not a lot of detail at this point, which makes it hard to get a view on the sustainability of the profitability of the company," said one source.
One person familiar with the information memorandum (IM) said that it was "very light" on detail about the state of a number of Channel 5's key programming and content deals.
There are concerns about the key Crime Scene Investigation franchise, a big rating staple on Channel 5's schedule for more than a decade, as it begins to wind down on-screen.
In 2007 Channel 5's former owner RTL splashed out £300m to grab Neighbours from the BBC.
The 10-year deal is understood to have been one of a number of contracts renegotiated when Desmond stumped up £103.5m to buy Channel 5 in 2010, but it is understood the IM provides little insight.
Another issue is establishing the extent to which Northern & Shell – which owns the Daily and Sunday Express, Daily Star and Daily Star Sunday as well as OK! – has boosted the performance of Channel 5.
"There has been an amazing turnaround at Channel 5, especially in its ad sales operation, that is self-evident," said a second person who has thumbed through the IM. But this source added that the amount Northern & Shell spends on Channel 5 advertising had to be taken into account.
Channel 5's TV ad sales operation brings in about £350m a year, easily outperforming rivals with double-digit growth annually for the last few years, with Northern & Shell spending an estimated £30m.
Any prospective buyer will also have to gauge the value of free publicity Channel 5 gets from Desmond's newspapers, as well as the advantages the broadcaster's sales team has had in being able to leverage cross-media deals with advertisers.
Heavy cost-cutting, rejuvenating Channel 5's TV ad sales operation and securing Big Brother have all been factors in an impressive turnaround from a £48m loss when Desmond took over Channel 5 in 2010 to a £20.6m profit in the six months to the end of August last year.
This is remarkable given that Channel 5 has been loss-making for most of its existence since launching in 1997.
But the significant question is whether it can maintain this profit growth. Desmond is seeking £700m for the business, on the basis of 10 times profits estimated at £70m this year.
• To contact the MediaGuardian news desk email media@theguardian.com or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000. If you are writing a comment for publication, please mark clearly "for publication".
• To get the latest media news to your desktop or mobile, follow MediaGuardian on Twitter and Facebook. Reported by guardian.co.uk 18 hours ago.