Channel 4 'must form partnership'

Channel 4 faces a funding shortfall of £150m

Channel 4 should become part of a bigger organisation through a merger or partnerships, Ofcom has recommended.

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.

This would ensure that the channel was a strong alternative public service broadcaster to the BBC.

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 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".

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.

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.

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.

Public service