Guardian Media Group comes out strongly against Channel 4 - BBC Worldwide merger

The Guardian Media Group (GMG) has vociferously opposed the British government proposals for a joint venture between Channel 4 and BBC Worldwide, on the grounds that it would damage commercial media groups.

Earlier this year, communications minister Lord Carter's interim Digital Britain report suggested that a new, enlarged public service broadcaster could be created, with Channel 4 at its heart, as a means of providing public service content beyond the BBC. (See: British government favours Channel 4's merger with BBC)

Yesterday, however, in its response to Carter's report, GMG called any tie-up between BBC Worldwide and Channel 4 "an inadequate solution for a converging media environment" that is unlikely to "have negative effects on the commercial sector - thereby undermining the potential for a genuinely plural public service content market".

Public intervention, according to GMG, should only come into play where it can be "targeted to address specific gaps in public service content provision" and the market should be given the opportunity to deliver public service content before any public intervention comes into practice.

GMG added that it believed any BBC Worldwide / Channel 4 joint venture would not address Channel 4's funding deficit, estimated to hit £150 million by 2012. The Guardian paper said, "We are particularly concerned that the entity envisaged in the Digital Britain interim report -- based on a joint venture between BBC Worldwide and Channel 4 - will inevitably seek to expand aggressively online in the UK, exploiting both BBC and Channel 4 brands."

The joint venture would also create "fundamental distortions in the advertising sales market", creating a "cross-promotional powerhouse that would divert ad revenues away from commercial players". By merging BBC Worldwide's and Channel 4's sales houses would give the combined entity greater bargaining power, "placing competing sales houses at a considerable disadvantage".

However, GMG did welcome some aspects of the proposals. It agreed with the assertion that public intervention was needed to fill gaps in public service content provision like local and regional news, in which GMG holds significant interests. Local and regional news is "becoming less commercially attractive", the media owner said, and called for merger rules to be relaxed.

Interestingly, the country's anti-monopoly watchdog had recently disallowed Project Kangaroo - a BBC Worldwide, ITV and Channel 4 joint initiative to provide a single destination for video on demand in the UK. (See: UK anti-monopoly body stops BBC - ITV - Channel 4 online joint venture Project Kangaroo)