RTL to reduce costs amid potential Channel five merger with Channel four

Europe’s biggest broadcaster the RTL Group has announced that it will be cutting costs due to a severe reduction in advertising booking which is set to substantially reduce profits.

RTL which owns Channel 5 in the 5 in the UK has announced that if there were to be any merger with channel four it would allow the government to retain a majority stake as the value of the UK channel has been written down to 314 million.

The value of all media assets has fallen over the last year although in 2008 RTL actually saw an increase in earnings due to the increase the FremantleMedia unit, which produces hit TV shows such as the X Factor.

Following Lord Carter’s Digital Britain interim report in January a partnership between the Channel 4 and BBC Worldwide was possible but the merger with Channel five is the preferred option.

Back in November the government did not follow through plans to help channel four to switch from analog to digital using license fee funds.

Since then Ofcom the independent regulator said that Channel Four should seek other partnerships or merge in order to become an alternative to the BBC and RTL UK have actively called for the merger in order to cut costs.

The report highlights the need for consolidation and the combination of Channel 4 and 5 merging makes industrial logic as they have similar business models with makes a viable and sustainable longer term solution.

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