Ofcom approves Channel 4 funding

Broadcaster sought $179 mil a year by 2012

LONDON -- In a move welcomed by Channel 4 chief executive Andy Duncan, Ofcom said Wednesday that it has endorsed the broadcaster's call for as much as 100 million pounds ($179 million) a year in funding support by 2012 and said that ITV and Five will likely be free of public service obligations by 2014.

In a speech to the Royal Television Society in advance of the publication of Ofcom's public service review next week, Ofcom chief executive Ed Richards said that Channel 4's medium-term financial prospects were not sustainable.

"To break even, Channel 4 would need to cut its investment year-over-year from (now) to 2012 to the detriment of the public content that audiences tell us they value," Richards said. "While we are not as pessimistic as Channel 4 itself, we do believe this annual deficit could amount to between 60 million pounds ($103 million) and 100 million pounds by 2012."

Duncan said that Channel 4 was "very encouraged that Ofcom now broadly accepts our forecasts on the size and urgency of our funding gap and agrees that identifying a new funding mechanism for Channel 4 is a pressing priority."

Richards also conceded that, after 2014, there is a strong case for releasing ITV1 and channel Five from their public service obligations.