Public or private? 

26 November 2008 tbs.pm/982

Government ditches plans to give Channel 4 £14m digital switchover help

So the Government has decided rather tacitly to withdraw the earlier digital switchover help proposed for Channel 4 in deference to a more complete solution, which is not only what Channel 4 wanted in the first place but also the perfect excuse for backing out of a pledge that was rapidly threatening to be unworkable.

The fact is that the European Commission’s objection to Channel 4 being given cash from the TV licence fee in order to fund its digital switchover has had far greater ramifications for any future blueprint for UK public service broadcasting than either the Government or (in particular) Ofcom is willing to admit openly in public.

Indeed this is all very embarrassing for Ofcom – even though nobody will dare to admit this – since Ofcom has spent some considerable time and effort drawing up possible future scenarios based around the principle of top-slicing the licence fee, yet nobody seemed minded to check whether or not some of the proposals were actually legal.

So Ofcom was effectively proposing options that were essentially unworkable because nobody bothered to check subsidy issues in relation to European law, therefore many of the suggested solutions ended up being based on ideology as opposed to reality. But of course none of this answers the question as to what will eventually happen to Channel 4.

The urgency to find a solution to all of the UK’s public service broadcasting problems has accelerated due to worsening economic conditions along with the realisation that the electoral timetable (with a general election in the way) isn’t exactly favouring a delayed solution.

Bearing in mind that the media industry accounts for an important chunk of UK trade both internally and in terms of valuable exports, the current economic circumstances have literally forced the Government into acting sooner rather than later in order to attempt to protect this important industry.

Some people have suggested that privatising Channel 4 might be the only economically viable option left under the current circumstances, and although this might have been considered a far-fetched option not so long ago, it all depends on whether ministers can persuade themselves that special legislation will be enough to protect Channel 4’s remit.

Especially as the cash raised from Channel 4 privatisation could be eagerly devoured given the current circumstances, although any privatisation would raise awkward questions about ITV’s public service remit and its regulation. Or lack of it, given Ofcom’s past willingness to freely accept ITV’s pessimistic viewpoint without contradiction.

The possibility of any additional taxation levied on the media industry in order to fund Channel 4 may be a non-starter given the current economic situation, so unless more money can be dragged up from somewhere it may be the case that government ministers may start to think of previously unthinkable things.

So what will happen to Channel 4 next year will be especially interesting, and ITV will also learn whether or not it will be able to eventually let go of all of its regional broadcasting responsibilities at the same time, as well as presumably addressing the issue of contract rights renewal that has plagued ITV plc in recent times.