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The comments, made yesterday by RTL group chief executive Gerhard Zeiler, are the first public ones made by RTL since Five was reported to be in potential merger talks with Channel 4.

Zeiler said the need for a partner for Five has 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."

Zeiler confirmed to Reuters that Five has been talking with Channel 4 but stressed that was only one possible deal that the channel could do. Earlier this month it was reported that shareholders at Five had held talks with US fund manager Bill Huff, who owns 20% of Telewest, about a possible collaboration between the two media companies.

It was speculated that this could culminate in a merger of the sales houses of Telewest and Five, which is 65% owned by RTL and 35% by United Business Media.

"But that is only one option among many and within the next 18 months we will make a decision which alternative we are going to take. What we need is a multichannel strategy," Zeiler said.

The option of a merger with Channel 4 is complicated by the issue of public ownership, which would require an act of government to allow any merger with Five to go ahead.

Channel 4, which looks increasingly keen to change its structure, has hired a political PR firm to lobby for that purpose while the government has indicated that the state-owned channel could be auctioned off, possibly even putting it in foreign hands and out of Five's reach.

With such uncertainties presented by a merger with Channel 4, BSkyB is another option from an RTL perspective. In the past this has only ever been talked about as a takeover of Five by Rupert Murdoch, who controls Sky.

However no talks are understood to have taken place with BSkyB but Gunter Thielen, chief executive of RTL parent Bertelsmann, confirmed in an interview with Reuters that such talks were definitely an option.

"In the long term Five is too small. Channel 4 is one option but we could also talk to BSkyB. But there are no talks at present," he said.

BSkyB, part of Rupert Murdoch's global satellite TV empire, has long been believed to be seeking an outlet on terrestrial broadcast television, either through the purchase of Five or by launching its own station.

Whether Murdoch is still interested is another question. Most recently Murdoch has denied he has any interest in buying outright or taking a partial stake in Five despite the fact that it would give him a much coveted terrestrial TV presence.

The two recently moved closer together when Five awarded BSkyB its estimated £6m news contract. Sky News will take over from ITN in 2005.

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