Viacom buys Channel 5 for £450m

02/05/2014

Viacom, the US TV giant behind MTV and Nickelodeon, is to buy Channel 5 in a £450m deal that will net a huge profit for Richard Desmond.

The move marks the first time that a US company has bought a British public-service broadcaster, and the deal is awaiting approval from communications watchdog Ofcom. However, as Viacom already broadcasts in the UK the deal is likely to get a greenlight.

Channel 5 was launched in March 1997 as the UK's fifth terrestrial TV channel. Its most popular shows currently include Big Brother and Celebrity Big Brother, as well as Australian soap operas Neighbours and Home And Away.

Its main channel, Channel 5, is watched by more than 42 million viewers a month, and includes a strand for pre-school kids, Milkshake!. Its other channels are 5*, which focuses on 16-34 year olds, and 5USA, which carries American programming. Channel 5′s on-demand platform, Demand 5, delivered more than 23 million views in January 2014.

The sale reportedly drew interest from more than 20 potential buyers, including Discovery Communications, Scripps Networks and BSkyB, as well as Viacom.

Toby Syfret of Enders Analysis said Viacom will need to show it can produce programming that has a mainstream appeal for Britons and it would be “a mistake” to rely on imported American shows such as Jersey Shore and SpongeBob SquarePants. “The whole service has got to have a broad national appeal,” he said.

Ofcom rules require half of Channel 5’s programming to be original UK productions and it must broadcast 260 hours of news a year. Channel 5 has a 6 per cent share of TV viewing.

The acquisition will more than triple Viacom’s share to 8.4 per cent from 2.4 per cent. BSkyB already sells Viacom’s TV advertising in Britain, but it is understood the US giant may not hand Channel 5’s ad sales to Sky in the near future.

Desmond is proprietor of the Daily Express and Daily Star, and bought the broadcaster for £103.5m I in 2010.

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