ITV may be allowed to cut regional news

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ITV could be allowed to slash regional programming, including news, under proposals from Ofcom published today.

The report proposed to maintain ITV1's quotas for original UK productions, independent productions and national and international news.

But ITV's regional news services may be overhauled to ease pressure on the broadcaster as it suffers an advertising slowdown, according to the TV watchdog.

Ofcom said that between £145m and £235m of additional public funding would be needed by 2012 to keep public service broadcasts at current levels on channels other than the BBC - ITV1, Channel 4 and Five.

The proposals come under the second phase of Ofcom's review into public service broadcasting, launched as the industry faces huge changes, including increased competition and the digital switchover.

ITV1 could have quotas for programmes made outside London reduced from 50% to 35% under the proposals.

Ofcom proposed that the number of regional news broadcasts should be reduced during the day, with the focus on prime-time news broadcasts instead.

The minimum quota for ITV's regional non-news programmes should also be cut from 30 minutes to 15 minutes on average a week, it suggested.

In terms of ITV Wales, STV and UTV, peak-time news output would remain unchanged, but the minimum volume of non-news programmes in Wales, Scotland and Northern Ireland would be halved to one-and-a-half hours a week.

ITV is seeking to rationalise its regional news delivery in England and the Scottish borders from 17 separate main programmes to nine.

The Ofcom report said: "We regard its most recent proposals, developed after detailed discussion with us, as a credible means to sustain quality national and regional news services on ITV1, and propose to accept them.

"We propose to raise Channel 4's out-of-London quota from 30% to 35% from 2010, and to introduce a new quota for Channel 4's productions from Scotland, Wales and Northern Ireland, also from 2010.

"These would need to be aligned to new long-term funding arrangements for Channel 4.

"We also propose to make a small adjustment to Five's current quota for original productions from 53% to 50%, with a reduction from 42% to 40% in peak time, from 2009.

"Alongside this, we welcome Five's commitment to enhanced delivery of children's programmes going forward."

There is currently a subsidy for commercial public service broadcasting, which Ofcom estimates would be able to contribute £185m in 2012.

But Ofcom said the total public funding needed for audiences to enjoy the same level of content would be between £330m and £420m - leaving a shortfall of up to £235m.

The money is needed to safeguard the types of programme-making which are less profitable and under threat in a multi-channel age, said Ofcom.

Content such as UK-made sitcoms, children's programmes, current affairs, films and comedy, regional news and single dramas are becoming increasingly commercially unattractive, it added.

In the meantime, it said soaps and sport are likely to remain profitable for commercial broadcasters such as ITV and channel Five.

The report said that, in the absence of a statutory basis to set quotas for children's programming, there is limited scope to enforce provision.

It continued: "We want to ensure that the BBC continues to play a leading role, including in safeguarding programming for older children and teenagers.

"Alongside Five's commitment, we propose to support Channel 4's aim to play a role in serving 10 to 16-year-olds."

The report's provisional conclusions said the BBC should remain the "cornerstone" of public service content and its core programme and services budget should be secure.

It said audiences should have a choice of providers in most areas of public service content, which the market alone would not provide.

Ofcom is proposing a number of models for providing public service broadcasting in the future.

These include an evolution of the current model, a system where only the BBC and Channel 4 receive public funding, or a competitive model where broadcast, online and multi-channel providers can compete to deliver the content.

Ofcom said its findings so far had shown that there was virtually no support for a BBC-only model.

Ed Richards, chief executive of Ofcom, said: "Audiences value public service programming highly, but strong digital TV take-up means it is becoming harder for our leading commercial broadcasters to provide this.

"We have provided a clear set of choices for maintaining and strengthening public service broadcasting in the future. Along with our proposals in the short term, timely decisions by Government and Parliament will be critical."

Ofcom's consultation will run until December 4 and it will publish a final statement early next year, setting out further details on the long-term models it has set out.

The Government and Parliament will then consider the issues it has raised.

ITV said it welcomed the contents of today's report.

It said: "We have consistently argued that the regulatory costs and commercial benefits of holding the ITV plc licences need to be re-balanced between now and analogue switch-off in 2012.

"We welcome Ofcom's acknowledgement of the need to strike the right balance between these costs and benefits, which is reflected in its proposals for ITV plc's regional news services, regional non-news programmes and the out-of-London quota."

The broadcaster added: "Ofcom is also considering its recommendation to the Office of Fair Trading on the appropriateness of the CRR (Contracts Rights Renewal) mechanism, its second phase consultation on the regulation of advertising minutage and a review of the networking arrangements that currently see ITV plc subsidise STV, UTV and Channel.

"The outcome of these reviews is also of crucial importance to ITV plc's ability to sustain investment in UK production.

"Today's statement also sets out Ofcom's refined options for the longer term future of public service broadcasting to which the board of ITV plc will give careful consideration.

"ITV executive chairman Michael Grade will set out ITV's considered response to all these issues in a speech to the Royal Television Society on 8th October 2008."

CRR was put in place as a condition of the Carlton-Granada merger.

It is an automatic system in which the amount of money advertisers committed to ITV was reduced if ITV's overall audience share fell.