Media Forum: Is the Ofcom result positive?

Will Ofcom's PSB review decision prove beneficial, Alasdair Reid asks.

The Channel 4 boss, Andy Duncan, clearly has a powerful hypnotic hold on Ed Richards, Ofcom's chief executive. Four years ago, when Ofcom's review of the future of public service broadcasting was building momentum, and Duncan was lobbying for help in bridging a widening "funding gap", Richards was distinctly unsympathetic, arguing that Channel 4 should look to self-help and internal efficiencies rather than handouts.

Duncan said at the time that he'd change Richards' mind and he has. The review recommends that the BBC should no longer be the only publicly funded UK broadcaster. Channel 4 should get the handouts - likely to be anything up to £100 million a year - it believes it needs to balance its books; while, in the interests of fairness, ITV's revenue struggles will also be recognised in a reduction of its current public service requirements, particularly in areas such as regional news.

Richards' conversion is, in hindsight, rather remarkable. But that isn't the only noteworthy aspect of this whole affair. Even more astonishing (and perhaps disturbing) has been the relentless round of leaks, hints, nudges and policy speeches that Richards has deployed to prepare the ground for what will surely be the most significant recasting of the terrestrial broadcast economy since the launch of Channel 4 itself in 1982.

But, just as Duncan hypnotised Richards, Richards has hypnotised both the political establishment and (so it seems) the broadcast market. There's been some debate and that will increase as this issue moves more formally into the political arena. But it's surely telling that the classic free market take on this - that in an age of multiple digital platforms we arguably need less state broadcasting, not more - has hardly been heard at all.

And, Kelly Williams, the sales director of five, says there's another huge factor that seems to have been ignored: the effect all of this will have on the dynamics of the broadcast advertising market.

He argues that Channel 4 will use fresh funds to bolster audiences and compete more aggressively in the airtime market. He adds: "Channel 4 says it is suffering from the downturn, but we're all suffering from that. It's disappointing there doesn't seem to be a more balanced view. Channel 4 has such a fantastic brand that it has become almost bulletproof. Perhaps there aren't enough people looking at the market the way we do."

Perhaps that's true, Andrew Constable, the head of media at Coors Brewers, agrees. He's by no means comfortable with some of Ofcom's conclusions. He explains: "The danger is that there will be far-reaching consequences that no-one can possibly predict at this point. It will be almost impossible for Ofcom to guarantee that what it does will benefit both viewers and advertisers. And let's not forget ITV in all of this. ITV is still vitally important for advertisers. While we're worrying about Channel 4's funding problems, ITV is still in a straightjacket, yet has to compete in a commercial environment, while the BBC gets away with things that commercial broadcasters can't do. So I'm stuck on the fence."

And John Davidson, the group TV trading director at Starcom Media- Vest Group, agrees that it's easy to get emotional about Channel 4. He adds: "If Channel 4 were allowed to go backwards, it would become a shadow of its former self and would probably never recover. And if you look at what it has achieved in the past and the fact that it's still distinctive, it would be hard to give that up. But there would be dangers in giving it public funding too."

However, Richard Oliver, a managing partner at Universal McCann, says he's broadly in favour. He concludes: "We'd like to see Channel 4 able to draw back from the Deal Or No Deal-type programming that it has had to introduce to compete in certain areas of the schedule - and focus instead on more things like Shameless that no-one else can do and are popular with viewers and critics alike."

NO - Kelly Williams, sales director, five

"Channel 4 will use this money to compete aggressively in the broadcast advertising market. It already has an extremely strong position and public money will be used to strengthen its commercial position."

MAYBE - Andrew Constable, head of media, Coors Brewers

"Channel 4 is an important broadcaster but so is ITV, and although Ofcom wants to relax some of ITV's public service commitments, it's not proposing to do that for many years. I think it's potentially unfair to put ITV at such a disadvantage."

MAYBE - John Davidson, group TV trading director, SMG

"The worry is that if Channel 4 receives public funding, it will be less independent. And it would need to be adequately audited. I think everyone should be clear about exactly how efficient Channel 4 has been."

YES - Richard Oliver, managing partner, Universal McCann

"There are areas where we realise that the free market isn't necessarily going to be for the best and, after all, the existence of the BBC means that we don't have a completely free market."

- Got a view? E-mail us at campaign@haymarket.com.