Channel 4 still in Discovery
Chief executive David Zaslav says pay-TV firm is always on the lookout for acquisitions in Europe but £10bn needed to buy ITV makes it unlikely target

Discovery is still interested in buying a stake in Channel 4, despite the government backing off on plans to fully privatise the channel.

The pay-TV giant’s chief executive has said it is in the market to buy a major broadcast channel – but he added that ITV is unlikely to be a target due to its high price.

Last month, the government made a U-turn by dropping plans to potentially sell off Channel 4 – while keeping alive the prospect of a minority stake sale – which left potential suitors such as BT and Discovery mulling strategic options.

David Zaslav, the chief executive of Discovery, said the company was still interested in a potential deal if it could be given freedom to run less public service broadcasting content.

“Having [another] broadcast channel in Europe would be attractive,” said Zaslav, who in the past has looked at Channel 5 and a 50% stake in Gold owner UKTV when the businesses have been up for sale.

“It would really depend on what the pricing would be, but also we’d need enough flexibility to commercially programme it. So the question for anybody with Channel 4 – we’ve looked at it over the last year or two – has been, will there be an opportunity to programme it in a way [that appeals to Discovery]?”

Zaslav said the company is always looking for potential media acquisitions in Europe, having acquired the pan-European rights to the Olympics for £920m, taking over Eurosport and this week striking a deal with the BBC and the All England Lawn Tennis Club to air Wimbledon.

“We’re looking at all intellectual property, because that’s also a direct investment, and then we’re also looking at additional platforms and some of those might be traditional. They could be broadcast, could be more cable, could be more compelling sports intellectual property.”

While Zaslav did not rule out a bid for ITV, he indicated that with a market capitalisation of £8.5bn, and requiring well over £10bn to acquire, it was an unlikely target.

The biggest acquisition the company has made so far was the $1.7bn (£1.2bn) deal for Nordic broadcasting business SBS in 2012.

“Nothing’s impossible,” Zaslav said. “ITV has done a great job. It’s been a huge grower of scale in the UK. We’ve talked to Adam [Crozier] about doing some things together, we’re in a lot of discussions with the BBC about doing things, we’re already in business with Sky. I think nothing’s impossible. But we’re looking at smaller assets generally that we can get synergy with and that will help us grow faster.”

There is, of course, always the possibility of a joint bid involving Virgin Media owner Liberty Global.

The two companies tied up to buy super-indie All3Media, maker of shows including Gogglebox, Call the Midwife and Midsomer Murders, with Liberty Global for £500m in 2014.

Liberty Global controls a 10% stake in ITV, putting it in pole position if the broadcaster was put in play for a sale.

John Malone, the chairman of Liberty Global, is one of the largest shareholders in Discovery Communications.

Malone, chief executive of Discovery from 2005 until 2008 when the company was taken public in the US, holds a stake which gives him almost 30% of the voting power.

Zaslav also said that wading into the increasingly costly Premier League rights battle, once considered a strategic option, was pretty much off the table now.

“We don’t want to tip over and we’re competing with players in some cases who feel they need the football rights in order to keep their distribution platforms alive,” he said, referring to incumbent rights holders Sky and BT.

“I think we would be selective about big-time soccer because Eurosport’s quite profitable and when you put Eurosport together with the Olympics, we now know that based on our deals we’ve done already that the Olympics will be profitable for us.”

Despite this, he said Discovery looks at all quality sports when they come up for auction, such as the current Bundesliga rights which Sky controls in Germany.

Zaslav was also asked about future plans for All3Media.

“I think our focus will be more primarily in the scripted area,” he said. “Intellectual property that we can have sway over. We see All3 as a way to diversify. We’re a sports, kids and lifestyle, non-fiction company. We do a little bit of scripted. But what was really attractive to us was this would be a way to work with Liberty Global to aggregate more scripted and we’ve been doing that and I think you’ll see more of that.”