Channel 4 chief warns new Bill could force early privatisation

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The head of Channel 4, Mark Thompson, has warned that the channel could end up in the private sector if the Government's proposed new media legislation sparks consolidation and leaves just a small number of players to dominate the industry.

The draft Communications Bill, published on Tuesday, contained some "troubling" aspects and provoked "disturbing themes", Mr Thompson told a Royal Television Society seminar on Wednesday night.

He was particularly concerned that the massive purchasing power of a few media empires would put smaller players, such as Channel 4, under serious pressure.

The proposed legislation would allow Rupert Murdoch's News Corporation empire to buy Channel 5, while ITV was opened up to bids from foreign companies for the first time. Channel 4 is a commercial channel but it is publicly owned.

"We will have to be vigilant to ensure that diversity doesn't end up meaning its opposite and that a series of concessions to the big players doesn't leave them to become even more dominant, while smaller players like Channel 4 are squeezed," Mr Thompson said.

He feared that increased competition in areas including television ad-sales, cross-promotion and buying TV rights could harm Channel 4's revenues and, ultimately, lead the Government to question whether it should remain a public entity.

A key test for the Bill, Mr Thompson said, would be whether it left room for "a financially-strong, publicly-owned, independent Channel 4."

A spokesman for the broadcaster said: "All we're saying is if we're damaged by increased competition, it might lead, inevitably, to the Government questioning if Channel 4 is sustainable as a public corporation.

He added however that the Government had not shown any signs of wanting to privatise the channel and emphasised: "We don't want Channel 4 to be privatised either."

Earlier this week, the Government unveiled its draft Communications Bill which, if passed, is widely expected to lead to a wave of consolidation across the UK media sector.

Analysts predict US media giants such as AOL Time Warner, Viacom and Disney would probably eye up the ITV companies after the planned move to relax the rule barring non-EU companies from taking over UK broadcasting assets.

"Those close to Government are confident that the competition authorities alone will be sufficient to stop effective market dominance in airtime sales, for example by a merged ITV. We feel less confidence than they," Mr Thompson said.

He believed that the dominance "afforded by the buying power that comes from combining the pay and terrestrial rights or from cross media ownership" would be more likely to happen if the draft Bill became law.

"These issues seem arcane, but they could all potentially impact on Channel 4's income and our ability to do the very things which the draft Bill charges us with doing," he said.

The same, he warned, could also be true for other commercially-funded public service broadcasters, making it tough for them to exist in a revamped media industry.

Despite his criticisms, however, he welcomed the new framework for self-regulation, in particular the fact that Ofcom, the new media regulator, would take an overview of public service broadcasting.

The draft Bill, which will be subject to three months' consultation and scrutiny in parliament, will not likely become law until November next year, giving broadcasters another 18 months to lobby for amendments.