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Ofcom rejects licence fee plan Channel 4 'must form partnership'
(40 minutes later)
Media watchdog Ofcom has rejected plans for the BBC to give existing licence fee money to other broadcasters. Channel 4 should become part of a bigger organisation through a merger or partnerships, Ofcom has recommended.
It came out against "top-slicing" the BBC's funding in a report into the future of public service broadcasting. The media regulator has suggested in a report that the channel, which faces a funding shortfall of £150m, could merge with Five or BBC Worldwide.
But it says unused cash allocated to digital switchover before 2012, and surplus licence fee money after then "are both credible funding options". This would ensure that the channel was a strong alternative public service broadcaster to the BBC.
The regulator's report also left the way open for a possible merger between Channel 4 and Five. Finding new ways of providing high quality regional news on channels other then BBC was also key, it said.
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. Ofcom chief executive Ed Richards told the BBC that it was important the corporation was not the UK's sole public broadcaster, and that Channel 4, "with its strong track record", could provide an alternative service.
He said the traditional broadcasting model - with the BBC funded by the licence fee and commercial channels funded by advertising - was "broken".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.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.""Our preference it to try to secure that through partnerships, joint ventures or even a merger."
Cash shortfallCash shortfall
Ofcom's report examined structural changes in the commercial broadcasting sector, including the digital switchover in 2012 and pressures on television advertising.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.
The report suggested that unused cash allocated to digital switchover before 2012, and surplus licence fee money after then were "both credible funding options".
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.
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.
Its regional structure was probably unsustainable, the report found.Its regional structure was probably unsustainable, the report found.
Public servicePublic service
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
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.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.
It suggested the establishment of independently funded bodies to provide regional news, at a cost of up to £50 million.It suggested the establishment of independently funded bodies to provide regional news, at a cost of up to £50 million.
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.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.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."