Left to its own devices? 

4 June 2008 tbs.pm/908

EU minded to block BBC aid for Channel 4’s digital switchover

This if anything is potentially good news for both the BBC and (paradoxically) Channel 4, namely that the European Union seems to think that diverting cash from the licence fee to aid Channel 4’s digital switchover – as well as perhaps also being used to fund Channel 4 itself – is illegal in terms of breaking commercial cross-subsidy rules.

Personally speaking I thought that all this talk of using the licence fee to cross-fund various semi-commercial activities (ie. Channel 4) would ultimately fall foul of EC anti-subsidy rules, and this now appears to be the case. It all hinged on whether money from the licence fee (as opposed to direct taxation) fell into the category of being a public subsidy.

And another broadcaster’s objections to this subsidy (presumably ITV) contains the line “Why should the non-public service commercial actitvites of Channel 4 benefit from aid?”, which more or less summarises the fundamental problem with the proposal in the first place, and is also the problem with using the licence fee to support C4 in the long term.

Don’t forget that ITV still have public service remits so it’s easy to argue that if C4 gets a subsidy then ITV should get some licence fee cash for digital switchover as well. But that argument still doesn’t resolve the commercial cross-subsidy issue.

So what next for Channel 4? Well it now looks as if it will have to fund its own digital switchover, and unless HM Government can perform miracles then Channel 4 will have to survive on its own – maybe either becoming fully commercial (as Mark Thompson proposed), or having to radically reinvent itself as a public trust or other non-commercial entity.