Britain outlines new future for the BBC

LONDON - The BBC was assured of 10 more years of licence fee funding today as the government published its report on the public broadcaster's charter, but it may have to share the proceeds with smaller rival Channel 4.

Sticking closely to a draft first published a year ago, Culture Secretary Tessa Jowell said the BBC's 77-year-old system of governance would be revamped in the wake of criticism of its journalism in the run-up to the Iraq war.

The BBC board of governors, charged with the dual job of managing the broadcaster and also overseeing it, will be replaced by an executive board and an external BBC Trust.

The structural changes "will ensure the continuing independence of the BBC," said BBC Chairman Michael Grade.

The world's best-known public broadcaster has proposed that the licence fee paid by all television households - worth more than 3 billion pounds this year - should increase by 2.3 per cent above the rate of inflation for the next 10 years to pay for the country's switchover to digital television and increased programme quality.

A government decision on the licence fee is not expected until the summer but the Financial Times reported on Tuesday that ministers have told the BBC that its funding requests are "unrealistic".

"The real issue now is not governance but funding," said Charles Allen, chief executive of top commercial broadcaster ITV.

"Their bid for an extra 6 billion pounds poses a serious threat to the ability of commercial players to invest in high quality, popular content and develop new digital services for viewers."

The BBC, home to shows like "The Office" and "EastEnders," may also have to share licence fee proceeds with publicly-owned rival and "Big Brother" broadcaster Channel 4, which has warned of a looming financial shortfall.

"The Government will consider forms of assistance for Channel 4, such as asking the BBC to provide Channel 4 with financial help towards meeting its capital switchover costs, and Channel 4's desire to secure a limited amount of additional digital terrestrial capacity from the BBC," the report stated.

A review of the BBC's funding will take place midway through the 10-year governing charter period, after the country has completed the digital switchover. The current charter expires at the end of 2006.

The government also urged the BBC to put entertainment at the centre of its mission.

"We do not subscribe to the idea that public service broadcasting should be confined to the 'worthy,'" the report stated. "On the other hand ... the BBC should not chase ratings through derivative or copy-cat programming."

The BBC has a dominant market share in Britain's radio and television, and many of its private-sector rivals lobbied for the broadcaster to be overseen by media regulator Ofcom.

In a concession to those critics, the government said that Ofcom would provide a "market impact assessment" when the BBC Trust is considering whether to approve a new BBC service.

The government white paper met criticism from Conservative shadow culture minister Hugo Swire.

"To many this white paper is such a disappointment. It singularly fails to rise to the challenge the BBC now faces," he said in the House of Commons. "It was supposed to provide us with a springboard to the new digital age. But it is not so much a launching pad as a holding pen."

- REUTERS