The commission said that running the station entirely from the licence fee did amount to state aid - but it did not accept BSkyB's claim that such aid was unfair and illegal under EU rules. BBC News 24, created to provide round-the-clock news and compete with rivals such as BSkyB, is delivered free and without advertising to cable or satellite operators.
The commission said yesterday that funding stemming from the licence fee must be considered to be state aid, which falls under the control of Brussels to guarantee fair competition. However, under EU rules "such aid might be compatible if it is granted as compensation for the delivery of services of general economic interest, as defined and entrusted by the member states".
In a statement, the commission concluded that the UK did not abuse its competence by defining a 24-hour news channel as part of the public service remit for broadcasting.
The commission found that the financial means granted to the channel did not exceed its actual costs and so were proportionate to the public service.
A BSkyB spokesman said the company was disappointed with the decision, as it felt the BBC's use of the licence fee to fund News 24 "clearly distorts competition. This has been recognised by a growing range of parties, including the ITC and other commercial broadcasters. It is, of course, part of the wider issue of determining the role of the BBC in the digital age, which should be resolved during the current funding review."
Tony Hall, chief executive of BBC News, hailed the commission's approval of public funding for the digital station as a "wholehearted" victory. He said the commission had clearly recognised the need for a publicly funded news service for digital satellite users.
Mr Hall said: "The growth of multi-channel television allows viewers to watch the news at a time to suit them, and this ruling rightly guarantees that when they do there is an independent public service coverage.
"Five million viewers already tune into News 24 for its in-depth and impartial coverage," said Mr Hall.Reuse content