Cash-strapped Channel 4 'to merge with BBC channel'

A DEAL to merge Channel 4 with the BBC's commercial arm is being considered by regulators and ministers in a bid to guarantee the broadcaster's future.

BBC Worldwide, which owns 28 channels around the world, lucrative rights to DVDs and some programmes as well as the Lonely Planet brand, would provide Channel 4 with £100 million a year - which media regulator Ofcom believes it needs to survive.

Channel 4 faces running out of cash within the next five years as advertising revenues decline. Last year its profits were just £1.6 million and analysts believe the figure will plunge into the red this year because of the economic downturn.

It has appealed for help from the Government and Ofcom, with the BBC merger the latest option under discussion.

Under the scheme, said to be "gaining traction", the BBC would give Channel 4 a majority holding in Worldwide, allowing it access to substantial revenues and control of the business.

The revenue would be used to support the "distinctive" public service broadcasting Channel 4 was set up to provide.