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Ofcom rejects licence fee plan Ofcom rejects licence fee plan
(40 minutes later)
Media watchdog Ofcom has rejected plans for the BBC to give existing licence fee money to other broadcasters.Media watchdog Ofcom has rejected plans for the BBC to give existing licence fee money to other broadcasters.
Ofcom's report stated: "We reject 'top slicing' the BBC's funding for programmes and services." It came out against "top-slicing" the BBC's funding in a report into the future of public service broadcasting.
But it says unused cash allocated to digital switchover before 2012, and surplus licence fee money after then "are both credible funding options".But it says unused cash allocated to digital switchover before 2012, and surplus licence fee money after then "are both credible funding options".
The regulator's report also left the way open for a possible merger between Channel 4 and Five.The regulator's report also left the way open for a possible merger between Channel 4 and Five.
Ofcom also proposed that the partnership between Channel 4 and BBC Worldwide be extended. Ofcom chief executive Ed Richards told the BBC that it was important that the BBC should not be the UK's sole public broadcaster, and that Channel 4 "with its strong track record" could provide an alternative service
The report examined structural changes in the commercial broadcasting sector, including the digital switchover in 2012 and pressures on television advertising. He said the traditional broadcasting model - with the BBC funded by the licence fee and commercial channels funded by advertising - was "broken".
In order to provide viewers with a choice of public service broadcasters, the industry needed to change, he said.
"Our preference it to try to secure that through partnerships, joint ventures or even a merger."
Cash shortfall
Ofcom's report examined structural changes in the commercial broadcasting sector, including the digital switchover in 2012 and pressures on television advertising.
It estimated this will leave a shortfall in funding for commercial TV of up to £235m a year by 2012.It estimated this will leave a shortfall in funding for commercial TV of up to £235m a year by 2012.
Ofcom said the key was not to prop up Channel 4 for its own sake but to ensure there was a viable institution apart from the BBC that would provide public service content that the market would not.Ofcom said the key was not to prop up Channel 4 for its own sake but to ensure there was a viable institution apart from the BBC that would provide public service content that the market would not.
The alternative would be to give Channel 4 public funding directly, relieve it of its public service remit and make it a fully commercial network, or mothball it.
ITV should be an essentially commercial network, Ofcom said, but should retain a "modest but important public service commitment" to news and UK content.ITV should be an essentially commercial network, Ofcom said, but should retain a "modest but important public service commitment" to news and UK content.
The channel's networking system was probably unsustainable, the report found. Its regional structure was probably unsustainable, the report found.
Public servicePublic service
The BBC had offered to share some news gathering resources with ITV, but Ofcom said the government needed to create an alternative plan to secure the long-term future of local news in Scotland, Wales, Northern Ireland and the English regions. FROM THE TODAY PROGRAMME class="" href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme
It suggested the establishment of independently funded bodies to provide regional news, at a cost of £30 to £50 million. The BBC had offered to share some newsgathering resources with ITV, but Ofcom said the government needed to create an alternative plan to secure the long-term future of local news around the UK.
Channel 4's chief executive, Andy Duncan, told the BBC a merged company "with Channel Four at its heart" would provide financial stability and safeguard public service broadcasting. It suggested the establishment of independently funded bodies to provide regional news, at a cost of up to £50 million.
He said:"In five, ten years' time, we want in Britain the BBC and one other strong organisation providing public service broadcasting in this country. Channel 4's chief executive, Andy Duncan, told the BBC a merged company "with Channel 4 at its heart" would provide financial stability and safeguard public service broadcasting.
He said: "In five, 10 years' time, we want in Britain the BBC and one other strong organisation providing public service broadcasting in this country.
"We don't want to have a situation where we're only reliant on the BBC - good as it is - because I don't think that's good for the public and I don't think it's good for the BBC.""We don't want to have a situation where we're only reliant on the BBC - good as it is - because I don't think that's good for the public and I don't think it's good for the BBC."