Troubled Channel Five has pulled out of Project Canvas, the BBC-backed IP TV venture, for financial reasons, but has not ruled out re-joining in the future.
The flagging channel has been put up for sale by its owner RTL, while sources of The Guardian believe Channel Five was unable to persuade its parent that Project Canvas, which will bring on-demand content to Freeview, is good value for money.
It is not known whether the loss of one of the seven companies funding the scheme will delay Project Canvas, which is due to launch as YouView next year. There is also a rumoured unveiling by the BBC Trust next week, but again it remains to be seen whether this setback will put plans on ice.
The seven partners, which include BT, TalkTalk, the BBC, Channel 4, ITV and Arqiva signed up to split the costs equally, which are reported to total £115.6m including the first four years running costs. Channel Five's departure will presumably mean the remaining investors will have to shoulder the cost, which has risen to about £16m each.
The director of Project Canvas, Richard Halton, told The Financial Times: "We are very disappointed but I don't think anyone feels the fundamental strategic rationale [for Canvas] has been diminished. We don't think this changes the likely scale or impact of the platform."
Five reportedly said the decision to walk away from the high profile project is down to a review of its digital investment strategy.
In a statement, Charles Constable, director of strategy at Channel Five, said: "We continue to support the objectives of Project Canvas and despite withdrawing our interest in the venture we believe it will be a critical part of our strategy for reaching consumers in the future."
Halton said he hoped the Channel would come on board "as a content producer in the future."
Final bids for the troubled channel are rumoured to be due by 19 July. There are reportedly six buyers currently in the running including a partnership partly composed of Big Brother inventor, John De Mol.