For Broadcast August 26, 2010

A sale of Virgin Media’s 50% stake to Sky or ITV is hard to imagine.

I used to be a bit of a cynic about UKTV - when I thought Dave was a silly name, when none of its channels commissioned any decent programmes, and when co-owners BBC Worldwide and Virgin Media seemed about as compatible as Simon Cowell and Sharon Osbourne.

But my cynicism is now a memory. I was wrong about Dave. UKTV has commissioned shows like Argumental, and now, lo and behold, the ownership issue looks set to be solved with Virgin Media’s 50% stake being hawked by hired bankers.

So who might be the buyer? What about BSkyB or a major US studio? Warner Bros has recently bought Shed Productions and NBC Universal has snapped up Carnival, so taking 50% ownership in UKTV could be part of a wider UK strategy that could also help tip the balance against Sky’s hold on the UK’s multichannels.

Or perhaps CBS might be interested - it already has a channel partnership with Chellomedia and has CBS channels on Virgin Media, Sky and Freesat. As to Sky buying it, the irony of Sky working with BBC Worldwide is almost too much to imagine, given the brickbats it throws at everything the BBC does. However, I have learned to never say never vis-à-vis Sky.

Perhaps ITV is more likely? Yes, the same ITV that limped out of pay TV with the disaster of ITV Digital, but with new helmsman Adam Crozier beating the drum for paid revenue streams, UKTV would be a step in the right direction. However, being in bed with even the commercial arm of the BBC might be a partnership too far, and C4 has already locked up UKTV’s ad sales for several years, reducing a potential upside.

Far more obvious is BBC Worldwide, one of the current co-owners. At the very least, chief executive John Smith would like a different partner - as he said two years ago, he would like a partner who “brings something to the venture; programmes or more channels or cross-promotion or something”.

Owning the whole shebang would also make sense for BBCW, but while Smith may want to get his cheque book out, he may face problems with the BBC Trust, which has already rapped his knuckles for making BBCW supposedly too much of a commercial animal.

So I’d say the clear favourite is Channel 4. Not only does chief executive David Abraham know the UKTV business inside out, but C4 and UKTV did an ad sales deal in January and there have been a growing number of programming agreements, handing the likes of Peep Show to Dave.

Adding UKTV to C4 would take the latter back into pay TV in a low-risk way, and allow for the cross promotion and programme sharing that John Smith has been itching for.

As for price, it will be higher than the £160m Sky paid for Virgin Media TV, but C4 has to be careful about throwing money around while it is in the midst of its own restructuring.

So maybe the most doable deal is one in which BBC Worldwide takes another 25-30% of UKTV and C4 takes the rest. That might make good sense for both C4 and BBCW, and help Virgin Media complete its exit from the content business it has turned its back on.