Ofcom confirms C4 merger plan

As widely trailed, UK regulator Ofcom has recommended to government that Channel 4 should be underwritten as a PSB broadcaster via a merger or partnership with either BBC World Wide, the commercial exploitation part of the BBC, or Five. It says Channel 4 should receive £130 million (E140m) a year from the BBC Licence Fee switchover surplus to invest‚ in such a merger. The idea of sharing the core license fee was rejected.

The report rejects the idea of any other sort of direct public funding for Channel 4 and calls for a “new governance and accountability framework” to deliver PSB obligations in its new guise. Ofcom also noted that Channel 4’s relationship with independent producers through the terms of trade agreement, which does not allow Channel 4 to make its own programmes or exploit rights, may need to be reconsidered.

Ofcom also recommends the establishment of “independently funded consortia” to deliver news to Scotland, Wales, Northern Ireland and the English regions funded from an annual pot of between £30 million and £50 million. These services would replace the PSB obligations of ITV which the regulator has accepted make no sense for a purely commercial broadcaster competing with others who have no such obligations ITV had threatened to hand back its PSB licence if there were not concessions.

The BBC has confirmed it is exploring potential tie-ups with Channel 4 to aid its delivery of public service broadcasting in future. The BBC said both sides “are now exploring the opportunity to commit parts of their current UK businesses to new ventures in order to create new value for both organisations”. It did add, however, that these proposals would not necessarily preclude other potential ideas raised by Ofcom, such as a merger between Channel 4 and Five.

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