Granada chief seeks 10% of TV licence fee

Charles Allen, the executive chairman of Granada, has called for the Government to slash the BBC's licence fee by 10 per cent and pump that money – £250m – into funding public-sector broadcasting on commercial television.

Speaking at last night's Royal Television Society dinner, Mr Allen, whose ITV group has been hit by a savage downturn in advertising revenues, called for the money to create a new "public service fund", administered by the regulator Ofcom. "The Government should ... earmark that £250m or so for new, additional public service programming on commercial channels," he said.

Under his vision, the ailing ITV broadcaster, which is pursuing a merger with its rival Carlton, would mastermind a new wave of current affairs, religious and educational programmes.

Mr Allen's plan met a lukewarm response from industry insiders. One media analyst said: "Sure, he'd love to see an extra £250m of cashflow [but] it's optimistic to think the Government is going to do that." Granada, which is awaiting the outcome of a regulatory inquiry into its tie-up with Carlton, is struggling to emerge from a string of disasters including the collapse of ITV Digital. It reported a loss of £378m last year after advertising revenues sunk by 4 per cent.

The Treasury is already investigating the BBC's funding ahead of an official review of the corporation's Royal Charter in 2006. A spokeswoman for the Departure for Culture, Media and Sport said the Government was "interested" in Mr Allen's views. Commenting on the review, she added: "All opinions will be taken into consideration and the review will encompass public consultation. Ofcom will make a full contribution and it will be obliged to review all public sector broadcasting within five years."

The BBC reacted coolly to Mr Allen's proposals. "The actual level of the licence fee is determined by the Government and not the BBC. Debate about the role and funding of the BBC, no doubt including the pros and cons of top-slicing, will more than likely feature in the consultation around the renewal of the BBC's charter," a spokeswoman said.