The news: Lord Snooty bows to the forelock-tuggers

A t long last, with the arrival of digital television a real multi- channel environment will be upon us. What effect will it have on the style and quality of British television news? For paradoxical reasons, it may be the BBC, not its frankly commercial competitors, which will need to go down market in the search for bigger audiences.

BBC news producers resent the suggestion that they are "dumbing down". But that is what it may come to as the Corporation increasingly feels the need to justify the licence fee by pointing to the biggest possible market in a world where viewers have the choice of many news providers. Commercial providers, whether terrestrial, cable or satellite, only need to make as much profit as will satisfy their shareholders. This is one case where the demands of politics could be more voracious than those of the market.

The days have been gone for many years when both the BBC and ITN could count on a captive audience for the Nine O'Clock News and News at Ten. But until the coming of digital, this was concealed by the relative failure of satellite and cable to take hold in Britain as they have in the United States.

There are several reasons for this difference. One is that the picture quality from broadcast signals in many parts of the US was so poor that people moved to cable; another that the content on the traditional three networks, CBS, NBC and ABC, was so predictable and dull that people wanted a change. Only recently have cable and satellite broadcasters in the US started really ploughing profits back into programme content.

The BBC can be proud of the way it has hung on to market share since the coming of BSkyB. Only in sport, where the BBC is not allowed to spend public money to match Rupert Murdoch's top dollar, has Sky really hit the ratings jackpot.

In homes with satellite and cable, the BBC and the other terrestrial channels scored an amazing 60 per cent last year, almost four times BSkyB's 15.3 per cent. That was far more than BBC executives themselves dared hope, and far, far more than the Murdoch ideologues - who hold the antipodean theory that British people only watch BBC because they are tugging their forelocks to Lord Snooty and the Establishment - could believe.

But now the coming of digital may mean that the BBC's primacy where it matters most, in the seriousness and reputation of its news reporting, may melt away.

Adam Boulton, the political editor of Sky News, has an obvious axe to grind. But he argues persuasively that the BBC will have to head down market because it can only justify the licence fee if it can show the biggest possible audience. In order to do that, it will go for the "very populist, lowest common denominator". He argues that Sky News's audience, which is relatively tiny, is already a narrowcast audience with a less populist agenda. And he points to remarks by Tony Hall, the head of news at the BBC, to the effect that you "can't make people eat their greens" as an admission that - however much Hall and others deny they are dumbing down - that is in fact what they will have to do.

It is this need to justify the licence fee that is the strategic reason behind the Somme-like battle over the prime time audience. The heaviest fighting is over the early evening. The BBC is counting on a populist news bulletin to hold on to the Neighbours audience. (So much for the Lord Snooty theory!) That is why the BBC is throwing in Jill Dando ahead of more experienced journalists. For the same reason ITN is moving its main news bulletin to 6:30pm.

On the face of it, the BBC ought to have the resources to make mincemeat of all challengers. It has its enormous roster of correspondents and stringers, paid for with public money through the Foreign and Commonwealth Office. It has incomparable talent and experience.

Unfortunately for its admirers, it has not been inspired in its use of these resources. The managerialist climate of the Birt/Hall regime has alienated many of the most committed journalists. Yet serious management mistakes have been made. First everyone had to move to White City. Now they will all move back to a newly refurbished Bush House. The new newsroom computer is regarded by those who have to work with it as a disaster. And the BBC is still operating at least four different news operations, not always harmoniously. There is the world service radio network; the domestic newsroom, with a distinctly Fleet Street news agenda; world service television, sadly starved of resources; and 24 hour news, which to put it charitably has not got off to a brilliant start.

The danger is that BBC news will fall between all these stools. If it is used by top management as a tool to maximize prime time audience and so justify the licence fee, it will risk opening a flank to specialist news competitors, like Bloomberg, Pearson or Reuters.

Already in print journalism the strongest commitment to international news, and serious political reporting comes conspicuously from those - the Financial Times, the Wall Street Journal, the Economist, the International Herald Tribune - who aim largely at a business audience. It is possible that, if the BBC drives down market, it will lose the vital market sector made up of opinion formers, here and abroad, to those who are willing to settle for making money out of a small, high-income business audience.

If that were to happen, British broadcasting would be in danger of going the way of the British newspaper industry, with its decades-out-of-date division between broadsheet toffs and tabloid proles. And of course if that were to happen, the case for public service broadcasting, and for the licence fee, would truly need to be re-assessed. There is bathwater here, and there are babies.