The News that Channel Five have decided to withdraw from Project Canvas will come as a blow to the other Project Canvas partners.

Channel Five has been put up for sale by RTL it’s parent company, RTL is one of the seven partners in the Project Canvas venture, which is expected to launch next year after getting the go ahead from the Ofcom.

One of the conditions each partner has to adhere to is to fund an equal share of the development costs. The BBC Trust has said that the cost of Project Canvas, including development, launch, and the first four years’ running costs, will be £115.6m.

In March the broadcaster was forced to pull out of launching a high-definition TV service on the digital terrestrial TV service Freeview before 2012 after failing to give a launch date or programming schedule to media regulator Ofcom. Five HD is supposed to launch on Sky’s digital Satellite TV service on Tuesday, 13 July.

With the approval of Project Canvas by the BBC Trust last month, and using the brand YouView is expected to be  unveiled next week. It is not known if the announcement about Channel Five will affect the plan at all.

Project Canvas’s other partners include BT, TalkTalk, Channel 4, ITV and Arqiva.

Channel Five said it has decided to pull out of Project Canvas pending a review of its digital investment strategy.

“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,” said Charles Constable, director of strategy at Five.

“Five struggled to convince Bertelsmann RTL’s majority owner it was a valuable thing to do,” added one source with knowledge of the situation.

Richard Halton, director at Project Canvas, said that the venture had received “excellent support” from Five, which he hoped would continue to work “as a content provider to the platform in the future”.

RTL is understood to have whittled down a list of parties interested in buying Five to a shortlist of about six.

These are said to include Big Brother creator John De Mol, in partnership with Greek broadcaster Antenna and through his investment company Cyrte Investments, and Richard Desmond.

The Final bids are due by 19 July with RTL then set to whittle the new owners down to a final two.

ITV and Channel 4 are not among the bidders.

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