Ofcom advocates PSB joint venture

Commercial broadcasters have welcomed Ofcom's recommendations on public-service broadcasting, which are likely to result in a joint venture between Channel 4 and BBC Worldwide.

Addressing a potential shortfall in TV ad revenue of up to £235 million a year by 2012, Ofcom said it favoured the creation of a public-service broadcaster by "forming partnerships, joint ventures or mergers between Channel 4 and other organisations".

This potentially opens the way for a new relationship between Channel 4 and BBC Worldwide, the commercial arm of the BBC.

Another solution would be a merger between Channel 4 and Five, though Ofcom's report said this "may raise immediate competition concerns".

Ofcom recommended that the BBC licence fee be kept, and rejected the idea of "top-slicing" the BBC's funding for programmes and services.

Channel 4's chief executive, Andy Duncan, strongly favours a tie-up with BBC Worldwide. He said: "It would create an exciting new organisation, combining and optimising strong brands, content and distribution."

Earlier this week, Channel 4's chairman, Luke Johnson, outlined his opposition to a merger with Five, describing this outcome as a "tragedy". However, Dawn Airey, the chair and chief executive of Five, continued to push for a merger with Channel 4.

The report also recommended that ITV and Five's public-service commitment be reduced to focus on national and international news.

The Government will now decide whether to implement Ofcom's recommendations.