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14|06|07

Ofcom to consider long-term options for Channel 4’s future

Ofcom set out today plans to consider options for Channel 4’s long-term future in its forthcoming review of Public Service Broadcasting (PSB).

The statement is published in response to independent analysis showing that Channel 4’s funding model is likely to become unsustainable. Ofcom said that there was no evidence of immediate insurmountable pressures on the broadcaster’s ability to deliver its public service remit, but that it would work with Channel 4 to monitor the impact of financial pressures over the next few years.

LEK’s review concluded that there are unlikely to be financial pressures before around 2010 that would require the broadcaster to significantly reduce its Public Service Broadcasting output. However, from 2010, Channel 4’s commercial performance is likely to deteriorate, placing significant pressure on its ability to deliver its PSB remit.

Ofcom considered its own assessment of Channel 4’s delivery of the PSB remit, also published in April, and over 120 subsequent responses to the review.

In the light of these, Ofcom has decided that:

• Though Channel 4’s ability to deliver PSB in the future is likely to come under sustained pressure from 2010 onwards, there is no apparent need for immediate intervention;
• However, work to evaluate potential interventions in the long term should begin now. Ofcom will assess a full range of options post 2010 as part of its next statutory review of Public Service Broadcasting which will begin in the autumn;
• The Channel 4 Board should significantly develop the ways in which it assesses the broadcaster’s remit delivery and public service contribution ahead of this period of financial uncertainty.
• Ofcom will monitor Channel 4’s financial performance and delivery against its PSB remit closely to observe the impact of emerging commercial pressures.

Next steps

In April, Ofcom’s first phase of the financial review outlined four options for next steps:

• Rule out any further public support for Channel 4;
• Monitor Channel 4’s financial performance and remit delivery with a view to considering the case for future intervention at a later date;
• Consider ‘safety net’ measures to mitigate risks to Channel 4 in the short and medium term and review potential options for more significant intervention at a later date; and
• Move immediately to assess the possibility of major intervention.

Taking into account LEK’s analysis and stakeholder responses, Ofcom’s preferred approach lies between the second and third options.

Within these, it has identified three principal areas of activity for Channel 4 and Ofcom:

• Ofcom will assist the Channel 4 Board in developing measures that can be used to evaluate its remit delivery more fully.
• In the autumn, Ofcom will begin its next PSB Review. This is the appropriate context in which to consider any long term intervention to ensure the continued delivery of PSB purposes. Ofcom’s work will help inform the Government ahead of its review of PSB funding.
• Finally, Channel 4’s Board should articulate publicly its vision of the broadcaster’s future role in Public Service Broadcasting and how it plans to meet its public service commitments.

Ofcom CEO Ed Richards said “We are concerned that Channel 4 may not be able to fulfil its public service purpose in future.

“The next phase of our work will be to ask what Channel 4’s purpose should be in the longer term, and what the best way is to achieve it.

“Ahead of this we need to significantly improve our ability to monitor and to assess its remit and ensure it is delivered effectively across a full range of programmes.”

Ofcom’s statement can be found at www.ofcom.org.uk

Ends.

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