In any logical world, the solution to consolidating the television sector is obvious…

Raymond Snoddy on Virgin Media’s decision to sell its 50% stake in UKTV – “the most valuable asset in the tier of basic pay channels” – at the bottom of the market…

It won’t have happened in time for the Edinburgh Television Festival, but the consolidation of the UK’s commercial television sector should be complete by Christmas – with mixed results.  But at least by then everybody should know where they stand and what businesses they are in, even if selling close to the bottom of the market doesn’t win too many managerial prizes.

The final piece of the jigsaw – the confirmation this week that Virgin Media has appointed bankers to sell its 50% stake in UKTV – offers the greatest strategic significance, with complexity to match.

By Christmas, if all goes according to plan, Virgin Media will be a cable distribution business concentrating on offering superfast broadband with a real chance of developing a winning hand.

The UK cable group never quite mastered the TV business, despite a flurry of activity and bold talk from Sir Richard Branson when he sold his mobile phone business, to what was then NTL, to create Virgin Media.

The sale of channels such as Living, Bravo and Virgin 1 to BSkyB earlier this year for up to £160 million recognised that reality. By including long-term carriage deals for Sky channels on cable, the sale also amounted to a peace treaty, ending at least most of the self-destructive squabbling between the cable and satellite groups.

Next up, the sale of Five, which at a superficial glance looks positively bizarre. The television industry passes up the chance to add a seldom-available piece, and allows it to go to one of the weaker elements in a national newspaper industry under even greater pressure than free-to-air television.

At least for RTL, the sale produced clarity. No more dreams of a merger with Channel 4. Now the company can concentrate on its Fremantle production business in the UK, which is going gangbusters thanks in no small part to the relationship with Simon Cowell and his new corporate vehicle Syco Entertainment.

Syco, a joint venture between Cowell, billionaire retailer Sir Philip Green and Sony, has ambitious expansion plans and that should mean more international production franchises for Freemantle around the world.

Five has to be called a failure for RTL. The mantra of the largest commercial broadcaster in Europe always was – first or second place in every major territory, although the power of the BBC makes the UK a unique market.

There was talk at press conferences years ago of aiming for a 10% share. The investment necessary to achieve it was never forthcoming.

Could Channel 4 have bought Five? Possibly, but the timing was wrong. Such a purchase at anything other than a knock-down price would have seemed flighty to a new regime committed to taking the channel back to its core purposes.

Again the new boys at ITV would have been slated by the City for buying loss-making free-to-air telly – even though the purchase might have made longer-term sense.

So with an eerie feeling of Groundhog Day – Richard Desmond is allowed to do it again. He bought the Daily Express and Star for £125 million and some years has taken out as much as £80 million in personal dividend and pension payments at an obvious cost to the papers.

Television is different, but don’t rule out Desmond making another pile of “silly” money out of Five. Programme quality will be another thing.

You shouldn’t underestimate the value that can be extracted from apparently declining assets.

UKTV is by far the most interesting prospect. It is the most valuable asset in the tier of basic pay channels created out of little more than library fodder by three British broadcasters who are, alas, all now dead.

Richard Dunn of Thames Television, who died in 1998, was the first executive to use the new delivery technologies to create new channels, and build something out of the ashes of a failed ITV licence bid.

The most colourful of the three – the oil services accountant Roger Luard, who died in the same year – saw value where few others did in buying up, or starting, basic cable channels for a song. He then had the foresight to create UKTV as a 50-50 joint venture with the BBC.

In turn, Sir Bob Phillis – who led the BBC negotiations, and who died earlier this year – had the foresight to include a BBC veto on the sale of the other 50% of the business. The veto suggests that Virgin Media will be very lucky to get anything like £350 million for its stake.

In any logical world, the solution is obvious. BBC Worldwide should buy the Virgin stake and fund it by cashing in, at least in part, on its joint venture outside the US with Discovery Communications – another Phillis deal. Programme supply agreements with Discovery could stay in place. The BBC might, however, be wary of having to face the outbursts of irrational politicians and concentrate instead on defending the licence fee.

The possibility of a grand alliance between the UK’s two public service broadcasters could be revived. It looks unlikely. Last time Channel 4 was looking for some sort of handout from the BBC and it is not clear how the channel’s public purpose would be served paying, say £300 million, for what are after all repeat channels even if they have fancy names such as Dave, Blighty and Eden.

An ITV deal would make more sense. It would take the commercial broadcaster into basic pay, though the competition authorities might take an extra sniff at the prospects of the UK’s biggest broadcasters coming together.

Private equity will undoubtedly have a look, but could fall foul of The Veto, as could anyone else coming from left field.

As a lasting testimony to Sir Bob, the BBC should face down its critics, keep control of its library and then take Dave and chums around the world.

The one thing you can be absolutely sure of is that Richard Desmond will not end up owning 50% of UKTV.