Channel 4 is on a path towards ‘managed decline’ unless it partners with another media group to create a new public service broadcaster, Ofcom has warned.
The media regulator today concluded that the future of Channel 4 depends on it creating partnerships and turning into a bigger company dedicated to news, current affairs and regional programming.
Channel 4 chief executive Andy Duncan responded to the announcement by telling peers that his preferred option was a partnership with BBC Worldwide – but he would not rule out a merger with Five instead.
A newly combined group would offer a “strong, alternative public service voice to the BBC” and help Channel 4 fill an estimated £150m-a-year funding gap through economies of scale, Ofcom said.
“A new organisation, with public purposes at its heart, should be established [and] Channel 4 is well-placed to be central to this,” Ofcom said in its final report on public service broadcasting.
“It would have a new remit to deliver news, current affairs, programmes for older children, programmes made outside London and a full range of digital media content.”
Two possible options have been mentioned in the Ofcom report: a partnership with BBC Worldwide – the BBC’s commercial arm that is run independently of the corporation – and a merger with Five.
But the regulator has refused to go into further detail about how a newly merged public service broadcaster, with Channel 4 at its heart, would work.
Ofcom chief executive Ed Richards told journalists this morning that it would be “inappropriate” for the regulator to make decisions that should be taken by the Government and Channel 4 itself.
“We don’t rule either [of the two options] out or either in,” he said. “I believe that would be inappropriate. It depends upon the terms.”
When pressed by journalists on why Ofcom would not say which option it preferred, Richards added. “I would challenge the notion that we haven’t offered a way forward. I think we’ve been very clear.
“We’ve been very clear what the alternatives are if that [merger] can’t be achieved.”
According to Ofcom, there are three alternatives if the creation of a larger public service broadcasting group is considered too risky.
One is for Channel 4 to receive direct public funding to stay afloat, and a second would be to privatise Channel 4 and let it abandon its public service remit.
Richards said the third option was one of “managed decline” – allowing the broadcaster to continue as it is until its finances run out.
“There is some urgency,” he said. “At the moment we are by default set on the managed decline option.”
C4 does not rule out Five merger
Channel 4 chief executive Andy Duncan today challenged the BBC to ‘think big’ and work with Channel 4 in a partnership.
He told peers that his preferred option as a way of resolving the broadcaster’s problems was a merger with BBC Worldwide.
But he told the House of Lords Communications Committee that while he regarded the alternative – a merger between Channel 4 and Five – as a “distraction” it could not be ruled out forever.
“Consolidation may have a role to play further down the line,” he said.
Duncan admitted that the BBC’s director general, Mark Thompson, was less enthusiastic about a partnership between BBC Worldwide and Channel 4 than he was.
“I think it is fair to say we are at the more enthusiatic end of the spectrum. I think they are at the more cautious end of the spectrum,” he said.
He told peers the BBC had proposed a partnership deal, but he would like to see it developed.
“What we would like to see is the BBC engage in coversations with that bigger prize in mind. I hope over the coming weeks that we will seriously engage in a proper way.
“The scale of ambitions thus far in the conversations haven’t been big enough.”
Duncan added: “I think it has taken a long time to get not very far.
“I think the BBC and us need to be able to think big.
“The current rate of progress isn’t sufficiently fast and needs to be accelerated.”