RTL bids to tighten grip on Channel 5

CHANNEL 5's biggest shareholder, media giant RTL, is seeking an investment bank to back its plan to take full control of the station.

RTL has a 65% share of the channel, with Lord Hollick's United Business Media holding the rest.

RTL wants an investment bank that would be prepared to buy out Hollick and remain a sleeping partner. German media group Bertelsmann controls 89% of RTL after buying Pearson's 22% stake in the business last week for almost £950m.

Thomas Middelhoff, Bertelsmann's chief executive, aims to take full management control of the businesses in which his company has stakes in preparation for his company's own flotation.

RTL has first refusal on Hollick's shareholding and United Business Media has made it clear that it is prepared to sell its stake for the right price.

Channel 5 is managed as an equal joint venture and the two shareholders have clashed over the station in the past, ending up in court last year after failing to agree on the programme budget.

Channel 5 is Britain's youngest national, free terrestrial TV company. It launched nearly five years ago, but has yet to break even, attracting only six% of the audience share.

A station source said: 'We're looking at a number of options and one is to find a bank to buy Hollick's stake and stay as a sleeping partner. This will give RTL proper control of the business.

'We are prepared to go to the financial community to find a partner. United does not want to make a big investment in the business.'

Given the state of the advertising market, United's stake in the company is worth considerably less than it was last year when Hollick sold his other television interests to Granada. Then, Hollick is understood to have demanded £350m for his share of the station, valuing the business at £1bn.

Bertelsmann is understood to be committed to maintaining RTL's investment in Channel 5 until it reaches about a 10% audience share, which could take at least four years.