Ofcom to look at Channel 4 funding model

Ofcom says there is “cause for concern” about Channel 4’s future funding and believes it “reasonably likely” the broadcaster will be loss making beyond 2010. The media regulator has committed to evaluate new forms of public support for the Channel 4 for the medium to long-term to secure its “public purposes”.

It will investigate as part of its next public service broadcasting review, which begins later this year. The regulator has also said it believes it may be appropriate for the Government to consider Channel 4’s requests for short-term support until longer term measures can be put in place.

Andy Duncan (pictured), Channel 4 chief executive, has welcomed the regulator’s conclusions. He says: “[The] statement ends the debate about whether or not Channel 4 is going to face future funding problems and we can now begin focusing on how to address them.”

The commitment comes in a new report that delivers Ofcom’s assessment of responses to its financial review of Channel 4, which was published in April. It included the channel’s own medium term financial forecast and analysis of its remit delivery and an independent financial analysis by LEK Consulting.

In the most likely scenario, LEK’s analysis of Channel 4’s business model pointed to declining profits from 2008 onwards although cash reserves would ensure the survival of the core channel until at least 2010.

Ofcom is proposing to work with Channel 4 to monitor its financial performance and help assess the necessary timing of any future intervention. It is also proposing to co-develop additional ways of monitoring the channel’s public service delivery to assess whether it is being impacted by the increased financial pressures the channel expects to face in the future.

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