Channel 4 'blocked from Five purchase'

[dutchman]

Channel 4 will reportedly face a legal obstacle blocking its acquisition of Five, which was recently put up for sale by its owner RTL.

According to The Guardian, measures in the Broadcasting Act 1990 and its later amendments prevent Channel 4 from having any control of Five's terrestrial licence.

Despite not publicly indicating its intention to acquire Five, Channel 4 is widely believed to be among the leading suitors, alongside Sky and ITV.

However, Section 5A, part II of the Broadcasting Act 1990 blocks Channel 4 or the BBC from operating Five's terrestrial licence.

It says: "A BBC company, a Channel 4 company or an S4C company is a disqualified person in relation to - (a) any licence...to provide regional or national Channel 3 services (ITV) or Channel Five."

Senior industry sources claim that Channel 4 would have to secure a change in the law before it was able to push through an acquisition of Five.

Channel 4 is thought to believe, though, that getting around the clause would not be a problem should it forge ahead with a bid.

The broadcaster's case could be further strengthened as Five's existing terrestrial licence will expire in 2012 following completion of the digital switchover.

However, competition regulations preventing one single player from controlling too much of the UK advertising market could prove a more significant challenge to the acquisition plans.

In March, it emerged that RTL chief executive Gerhard Zeiler had met with Channel 4 chairman Terry Burns and chief executive David Abraham to discuss details of a potential tie-up with Five.