C4 could takeover BBC commercial arm, says Ofcom

The BBC could be asked to transfer its commercial arm to Channel 4 in a bid to plug the £235m gap in funding for public service broadcasting, according to proposals by Ofcom.

It is one of a series of options published today (September 26) by the broadcast regulator following its year-long consultation into the future of PSB.

Ofcom’s first phase of research found that audiences still value PSB and that broadcasters are broadly fulfilling their role. However, it will become more difficult for the commercial operators – ITV, Channel 4 and RTL-owned Five – to meet their obligations as digital TV grows.

ITV and Channel 4 have both already said that they can no longer afford to fund PSB and Channel 4 has already called for its PSB obligations to be publicly funded. Earlier this week, Channel 4 announced plans to save £150m over the next three years and is reducing its workforce by 15%.

The Ofcom report agrees that audiences want PSB from the BBC but also from commercial operators. It says: “If audiences continue to want to enjoy the same mix of public and private content they have today, we estimated that public funding of between £330m and £420m is likely to be required by 2012 in addition to the core licence fee.”

It adds that with existing assets, such as free spectrum, this is reduced to be between £145m and £235m, and its proposals centre around plugging this deficit.

One of the proposals for helping Channel 4 to continue making original documentaries, comedy and one-off dramas is the transfer of BBC Worldwide, which the unit that exploits BBC programming globally. It says the BBC could develop partnerships with commercial operators, or some or all of it could be given to Channel 4.

It also suggests giving Channel 4 the £130m a year from the BBC licence fee to cover the costs of switching to digital broadcasting by 2012. The money would then become a surplus after switchover, which could be given to a state-owned but commercially funded broadcaster.

Meanwhile, the report also supports calls from ITV to reduce the PSB commitments that it is required to meet for its free spectrum. This includes news bulletins and regional programming. It proposes that it can reduces its PSB obligations from next year including a reduction in regional programming, such as daytime news bulletins, and reducing regional non-news programming by 50% to 15 minutes per week in England an one and a half hours in Wales, Scotland and Northern Ireland. This would coincide with Channel 4 increasing its output for the national and regional programming.

Ofcom will also support changes to ITV’s regional news services.

Finally, it says that Five’s PSB remit should focus on UK programming, network news and children’s shows although its suggests reducing its quota from 53% to 50%.

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