Allen argues that quality will suffer

EDINBURGH — British TV faces a funding crisis unless the U.K. production sector is liberalized and the business model for state-owned Channel 4 is radically rethought.

This is according to outgoing ITV topper Charles Allen, speaking at the Edinburgh Intl. Television Festival where he gave the flagship MacTaggart memorial lecture on Friday.

Allen, who will resign next month, effectively forced out by ITV’s dismal stock price and a weak performance by flagship channel ITV1, said that program quality across all channels was bound to decline sharply as ad coin became harder to come by — unless the U.K. production industry was freed up.

Acknowledging that ITV1′s ad revenue would be lower this year than any time since 1993, Allen said that “investing more and more to generate less and less” was not sustainable.

“At the extreme we’re in danger of trading down,” warned Allen. “ITV becomes Channel 4; Channel 4 becomes Five and so on. The upshot will be a poorer viewing experience for the British public.”

To bridge this funding gap, Allen said that Channel 4, which commissions all its shows from outside producers, should be allowed to move into production.

Restrictions preventing the BBC producing for third parties should also be scrapped — although Allen didn’t spell out how this would enable webs that are dependent on ad coin to generate more revenue.

On the topic of Channel 4, whose ratings success is hurting ITV, Allen was scathing — although he stopped short of calling for privatization.

The ITV topper accused his arch rival of abandoning its public service remit and giving nothing in return for its exception from government license fees.

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