Discovery, BSkyB Considering Joint Bid For Britain’s Channel 5: Report

Are longtime frenemies John Malone and Rupert Murdoch about to partner on a UK venture? That’s the word on the street according to The Financial Times which reports that the Malone-backed Discovery Communications and BSkyB, majority owned by Murdoch’s 21st Century Fox, are in talks on a joint bid for Britain’s Channel 5. The free-to-air broadcaster, which media entrepreneur Richard Desmond acquired for £103.5M in 2010, is thought to be seeking a buyer with about £700M to spend. The FTA channel has raised the antennae of several media companies with parties rumored to have shown interest including ITV, Turner Broadcasting, BT, NBCUniversal and Saban Capital. The latter is eyeing the possibility of merging Channel 5 with the UK’s Channel 4, creating the market’s third-largest broadcaster by audience. However, such a deal would require regulatory approval and the privitization of Channel 4. The discussions between Discovery and BSkyB have focused on the latter taking over Channel 5’s advertising sales operation, sources told the FT. Channel 5 is notably the home of Big Brother, although its contract for the show expires in 2015. The net also airs U.S. dramas like Under The Dome, CSI and Person Of Interest, but it’s previously dropped such titles as Once Upon A Time and Justified. Its weekly ratings hover around 4%.

Malone and Discovery, which operates about 200 channels worldwide, have been active in Europe recently. Liberty Global acquired Virgin Media in 2013 and last month agreed to pay $9.4B in cash and stock for Dutch cable operator Ziggo. Also last month, Discovery fast-tracked its acquisition of a controlling stake in pan-European platform Eurosport, and last year bought the SBS Nordic operations of Germany’s ProSiebenSat.1. Malone owns a 29.5% voting stake in Discovery, and Murdoch’s 21st Century Fox owns 39.1% of BSkyB. The moguls have clashed in the past and are competitors in Britain via Virgin and Sky. Still, BSkyB has a long relationship with Discovery, carrying several of its channels. Bids for Channel 5 are due on Thursday.

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