In March it was reported that state-owned Channel Four was seeking government approval to allow it to merge with rival Five.
The two have already admitted to holding talks when they first got together to discuss plans to combine their airtime sales houses.
The Observer reported yesterday that Channel 4 had also held talks with other broadcasters, including Telewest-owned Flextech, which is behind the cable channels Living and Bravo
The driving force behind a possible Channel 4 merger has been Luke Johnson, the chairman, who sees a merger as the only way to allow the broadcaster to compete effectively against the newly merged ITV and an increasingly powerful BSkyB.
With UBS on board, attention will now turn to the government, which will have to make a change in the law to allow the publicly owned broadcaster to merger with its commercial rival.
The sell-off of Channel 4 could bring a welcomed multibillion-pound fillip for Chancellor Gordon Brown. It is estimated that Channel 4, which had revenues of £770m last year, could be worth between £2bn and £2.5bn if it were privatised.
Five owners RTL and United Business Media both see a merger as part of Five’s future.
In March, Gerhard Zeiler, the RTL group chief executive, said the need for a partner for Five had become more pressing since the ITV merger and the emergence of three dominating forces within UK television -- the BBC, BSkyB and ITV Plc.
"The situation on the British television market now is that three major groups emerged with the BBC, BSkyB and now ITV," Zeiler said. "Those are the 800-pound gorillas and everybody else has to think about what they are going to do."
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