Channel 4 to lose independence

Network may be folded into 'wider entity'

The biggest structural changes in British TV in a generation are in the cards, as a leaked U.K. government report proposes merging its publicly owned Channel 4 web into a new, bigger broadcaster that might include a tie-up with pan-European broadcaster RTL’s commercial web Five.

Stephen Carter, the former topper of U.K. media regulator Ofcom who recently became Blighty’s broadcasting minister, has reportedly rejected plans to fund the advertising-supported C4 with coin from the BBC’s coffers or a tie-up with the pubcaster’s commercial arm, BBC Worldwide.

Instead, Carter favors creating a “wider entity” that would bow by 2012, when C4 claims it will face a funding shortfall of up to £150 million ($221 million) a year.

This could involve a merger with Five, although how this would work is unclear. But there is a growing feeling, which the recession has brought into sharp focus, that there are too many broadcasters in the U.K. and consolidation is necessary to make businesses viable.

If the proposals, published in the Financial Times Friday, become policy, it will be a huge blow for C4 CEO Andy Duncan’s campaign for a public subsidy. On Thursday Duncan rejected the idea of merging C4, a hybrid pubcaster set up more than 25 years ago to provide envelope-pushing fare, as “a mess.”

But he appears to be out of tune with Carter and his advisers, who have concluded that in an age of media plenty, driven by digital technology, C4 no longer gives auds unique content as it attempts to square its public-service obligation with attracting advertising money.

One point that is exercising policymakers’ minds is how to ensure that there continues to be an alternative public services news provider, apart from the BBC, if C4 doesn’t survive in its present form. C4’s nightly newscasts are highly rated for offering a different take on events.

One reason Carter is thought to be against a public subsidy for C4 is because he believes that money from state coffers, possibly diverted from funds presently used by the BBC for digital switchover costs, should be used to back the spread of high-speed broadband.

Following the collapse of the financial services sector, the government needs another economic driver and Carter seems convinced that broadband fits the bill.

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