Leading article: The test of a public service

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Channel 4 has enjoyed a good year. The group's annual report yesterday showed a 4.9 per cent rise in pre-tax profits in 2005, driven largely by increased advertising and sponsorship revenues. We should welcome the fact that the channel is proving commercially successful, especially at a time when other publicly owned concerns seem to be haemorrhaging cash.

Yet we should not forget that the only true test of Channel 4 is the quality of its broadcasting output. Since its foundation in 1982, the channel has been bound by a public-service remit. Unlike for purely commercial broadcasters, ratings and revenues are not everything. In this respect, the verdict on Channel 4's year must be more mixed. The channel is still in danger of relying too much on reality TV shows such as the Big Brother franchise. And at times it has become dangerously preoccupied with appealing to mass-market tastes. The promotion of the Noel Edmonds hosted Deal or No Deal is a good example of this tendency. However, in fairness to Channel 4, it should be noted that the BBC is increasingly encroaching on to its traditional patch. The BBC, which itself announced bold new programming plans yesterday, now targets alternative audiences just as much as Channel 4 used to. And the tussle over the rights to broadcast The Simpsons has confirmed that both broadcasters are now in direct competition for the best American shows.

The broadcasting game has changed profoundly since the era when Channel 4 was founded. Britain no longer has a mainstream culture that fails to cater for alternative or minority tastes. We now have an all-pervasive popular culture and a much greater proliferation of outlets with the arrival of digital. The orientation of Channel 4 was bound to change in this new environment.

At its best, the fourth terrestrial channel still provides a platform for pioneering and quality programmes. The IT Crowd showed that it can hold its own on the comedy front. And the coverage of the Ashes test matches last summer was exemplary.

The siren call for full privatisation should be resisted. This would surely make a slide downmarket in the manner of ITV inevitable. Britain needs a healthy alternative public service broadcaster in the new multi-channel digital world, when audiences will be increasingly fragmented, ratings smaller, and advertising revenues for the old terrestrial broadcasters diminished. As Channel 4's chief executive, Andy Duncan, warned yesterday: "We may have defied gravity in 2005, but it would be naive to assume we can do so forever."

Such realism is appropriate. Channel 4 must prepare itself to compete in an unforgiving new broadcasting world.