Michael Grade: Channel 4 should get BBC's license fee

Former BBC chair sees commercial UK TV biz "buckling"

EDINBURGH -- Channel 4 should end its dependence on advertising revenue and be funded from the BBC license fee instead, former BBC chairman Michael Grade said Sunday.

The move would protect the U.K.'s historic tradition of public-service broadcasting and provide meaningful competition to the BBC, as well as making the advertising market more sustainable, he said, speaking at the closing session of the Edinburgh International Television Festival.

Grade, a former chief executive of Channel 4 and executive chairman of ITV, urged a debate on the issue in the next two years, the period during which the BBC's next license fee settlement will be agreed.

He said that that with its current £3.5 billion ($5.4 billion) of guaranteed income and plethora of channels and services, the BBC had had become so big it was "almost unmanageable."

Channel 4'ss revenues of £830 million ($1.3 billion) last year were derived mainly from advertising. Under Grade's proposal they would be funded entirely out of the BBC's license fee and Channel 4 would no longer compete with ITV and Channel 5 for a share of the U.K.'s TV ad market.

Grade said the commercial television model was buckling without structural change of this scale and that Increased volumes of advertising inventory across digital channels were forcing overall prices down.

"There is so much ad inventory for sale that prices are plunging and that has a huge impact," Grade said.

Earlier in his MacTaggart keynote, director general Mark Thompson had called for supporters of public service broadcasting to fight to protect the BBC.

But former BBC chairman Grade said that the pubcaster had exceeded its natural size.
"The BBC is too big -- no question about it. It's in the DNA of any company that hasn't got a bottom line that it just keeps on expanding," he said.

"Mark [Thompson] didn't deal with the BBC value for money issue. The problem with the BBC is not whether it has public support; the real issue is how big should it be. Does it need all those radio stations and television channels?"

At the annual conference, which sets the tone for policy discussions in the year ahead, culture secretary Jeremy Hunt also waded into the debate about the scale of the BBC, urging the pubcaster to make deeper cuts and to limit its scale in the commercial market.

The BBC declined to comment on the suggestions beyond saying that Thompson was looking hard at its scale and scope and that discussions on the license-fee renewal haven't yet begun.