EC to investigate Channel 4 funding

Digital subsidy may distort competish

LONDON — The European Commission has launched an investigation into the U.K. government’s funding of Channel 4’s digital switchover costs.

Some £14 million ($27.7 million) of state aid has been proposed by Blighty’s authorities, to help the pubcaster with the switch to digital broadcasting.

However, the EC’s competition commission will now investigate whether the subsidy threatens to distort competition.

Competition Commissioner Neelie Kroes commented: “The commission is firmly committed to encouraging the digital switchover process, which has many advantages for consumers and innovation. However, it needs to make sure that any state support does not distort competition unduly.”

The probe was prompted by a complaint to the EC from a rival commercial broadcaster, which the commission would not identify, dating back to 2006. The complaint argued that Channel 4 has sufficient cash reserves of its own to cover the costs of digital switchover, which is due to be completed by 2012.

In a statement, the EC said it had “serious doubts” that the proposed aid was “necessary and proportional.”

A Channel 4 spokesperson played down the inquiry, noting that it was not unexpected.

“This is a step we always recognized the commission might decide to include in the process,” they said. “As their statement makes clear, this is a specific proposal to examine the government’s plan to fund Channel 4’s switchover costs and they do not oppose state funding for broadcasters in principle.”

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