RTL, the owner of the television channel Five, has submitted a bid for Flextech that is thought to value the rival broadcaster at between £800 million and £1 billion.

However, RTL is likely to face stiff competition, including from Sparrowhawk Media, which owns the Hallmark channel and is backed by 3i and Providence Equity.

ITV and BSkyB, which is 36.8 per cent owned by News Corporation, parent company of The Times, are also likely to have placed bids — the deadline for initial offers passed on Thursday — as is Viacom, the American entertainment group behind MTV.

Gerhard Zeiler, RTL’s chief executive, indicated his group’s interest in Flextech when he said that it was “a very interesting asset in a multichannel world”, adding that part of its attraction was that it “combined both subscription and advertising revenue streams”.

Flextech, the broadcaster behind Living TV, is owned by Telewest, the cable operator that is trying to merge with its rival NTL. Telewest has asked for interested parties to put bids in for the broadcaster, although it is not certain whether it will be sold.

RTL is the favourite to buy Flextech, because the pan- European broadcaster is desperate to boost its presence and protect the long-term position of Five in the UK, as audiences drift away from established broadcasters to new multichannel rivals.

RTL, 90 per cent-owned by Bertelsmann of Germany, made clear that it would have the firepower for a cash transaction. After buying out the 35 per cent of Five it did not own from UBM, a deal that was completed yesterday, RTL has net borrowings of €112 million (£76 million).

In the six months to June, RTL’s pre-tax profits were €367 million, up 4 per cent compared with the same period last year. Its results were driven by improvements at M6 in France, Antena 3 in Spain and Five in Britain, offsetting weakness in its largest market, Germany.

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