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“Managing decline” was the phrase that seemed to be everybody’s lips when talk turned to the future of terrestrial broadcasters at the recent Edinburgh International TV Festival.

ITV clearly believes it has found the way forward by forming into one big PLC. In his session at the festival, ITV chief Charles Allen painted a bright future in which the broadcaster’s longterm prospects have been boosted by a unified sales house, better cost efficiencies and the opportunity to finally get all the regional operations working in concert.

The other two commercial terrestrial players, however, are still contemplating their future directions.

A link-up between the two has seemed a real possibility in recent weeks – particularly after Lord Hollick, chief executive of United Business Media, which owns 35% of Five, said the channel had already been in talks with Channel 4.

In Edinburgh, Five’s chief executive, Jane Lighting, quickly poured cold water on the notion that the two were close to a deal when she said during a public service broadcasting session that any discussions were still at a preliminary stage.

But it was the new chief executive of Channel 4, Andy Duncan, who really quashed a lot of the speculation.

During the same PSB session, Duncan – until July director of marketing, communications and audiences at the BBC – made it clear that C4 is currently more interested in a tie-up with the Beeb in certain areas.

Both C4 and the BBC are publicly funded, with a very heavy public service remit. The trouble with a merger between C4 and Five would be reconciling the former’s public service obligations with the latter’s commercial goals.

Although it would be far less exciting for the market, a tie-up with the BBC might be best for the advertising industry.

It could keep the sales operations of Channel 4 and Five separate, averting at least one part of the consolidation feared after the ITV merger.

C4 would be free to continue along the cutting edge path that has made it one of the world’s most innovative broadcasters. It would need to do more to ensure its survival in a multichannel world, but it would at least be in a stronger position than it is now.

If C4 leaves Five out in the cold, the country’s youngest terrestrial brand has to decide what to do. A deal with a digital player is one possibility.

What appears essential is that both Channel 4 and Five find partners. The digital world is too tough for either to go it totally alone.