Ofcom raises prospect of auctioning off ITV and Channel 5 public service licences

Communications watchdog Ofcom has raised the prospect of auctioning off the public service licences currently held by ITV and Channel 5.

It described the move as "credible" and said it "could offer benefits to citizens and consumers".

The licences, which offer broadcasters prominent places on the Electronic Programme Guides (EPGs) and access to Freeview in return for public service programming including news coverage, run out at the end of 2014.

Ofcom is legally bound to advise the Secretary of State for Culture, Media and Sport on the issue and has outlined three possible options - to renew the existing licences for another 10 years, to extend them for a shorter period until the Communications Bill is passed or to open them up to bids.

Its report found that auctioning Channel 3, currently held by ITV, had the "potential to reinvigorate the existing Channel 3 model", while auctioning Channel 5 "would clarify whether a new bidder could offer a more significant commitment to original content production or important areas of public service content than the current licence holder".

But Ofcom said the existing licence holders could be expected to make a "sustainable public service contribution over the next licensing period, creating a case for renewal".

The report praised ITV's commitment to public sector broadcasting and Channel 5's "more modest" contribution.

It said Channel 5 spent £62 million on UK original programming in 2010, down from £122 million in 2007, but said that figure had increased in 2011.

It also raises the possibility of "establishing a separate, stand-alone licence for Channel 3 in Wales".

PA