The EC investigation of Channel 4’s digital funding is the latest in a series of problems that the big five channels have needed to wrestle with, writes Julian Clover.
It has always been an oddity that Channel 4 should seek to have additional help with the payment of costs to make the transition to digital broadcasting. It has now emerged that the top slicing of the BBC licence fee to provide Channel 4 with an additional £14 million funding will be investigated by the European Commission following a complaint from another broadcaster dating back to 2006.
The broadcaster has not been named but the list of suspects will probably account for just three; ITV, Five and Sky. The complaint is that Channel 4 should not receive the money because it had sufficient cash reserves. That may have been the case in 2006 and will have also been so when £28 million was last year found to buy into EMAP’s music channels.
However, the broadcaster that once enjoyed surpluses in excess of £70 million says it is heading for a £100 million shortfall in 2012, when the negatives of digital switchover are fully in place. Arguably with 85% of the country already enjoying digital TV, it is difficult to imagine what additional impact 15% worth of laggards might actually have.
Channel 4 has now begun to review its strategy, perhaps to bring itself back to the public service parts of its remit, which have often appeared lacking. A public corporation, which has to find its own way in the commercial world, Channel 4 often creates the impression that it is picking and choosing its public service responsibilities.
The success of Freeview means that most people have forgotten the early failings of BBC Choice, BBC Knowledge, and a BBC News 24 set memorably described as a disused polystyrene factory. The demise of ITV Digital is well documented and arguably the then Channel 5 strategy of not actually having one turned out to be not such a bad move.
Andy Duncan, attributed by some as being the architect of Freeview moved to a Channel 4 that ran its suite of digital channels as a pay operation. Film4, E4 and the later launch More4 became free-to-air, but the legacy of the pay-TV contracts with Sky means few can really be sure as to whether Channel 4 HD will be a part of Freesat when it makes its launch in the next few weeks.
The European Commission has form on the intervention in television projects. Sweden was taken to court when rules on an open market for DTT signals were found to have been breached. There were also investigations into state aid in Sweden, Germany and Italy.
The outcome of this latest investigation may save a few million pounds for the UK licence fee payer, but give Channel 4 a further financial headache.