The European Commission has said it will investigate Channel 4’s bid for £150 million subsidy from the Government stating that it may breach rules on state aid.  

The broadcaster has been promised £14 million from the BBC licence fee to help with the costs of digital switchover, but yesterday officials in Brussels said that they had “serious doubts” about whether Channel 4 should get that cash at all.

Commission officials questioned whether the broadcaster was being overcompensated, when it is both profitable and has a surplus of £180 million in the bank and it said that it was unclear whether the aid promised was “necessary and proportional”.

Channel 4 has been campaigning for extra help for years, arguing that as a state-owned “public service broadcaster” it should continue to receive some form of support equivalent in value to the free analogue spectrum that it receives already. Once the UK fully converts to the digital spectrum, the analogue spectrum will be worthless.

Last month Channel 4 spelt out what it needed to continue to provide “challenging, provocative and sometimes controversial programmes”, because it does not believe that it can generate enough advertising revenue to support its £500 million-a-year programming costs. That subsidy, on top of the £14 million already pledged, was up to £150 million a year. The demand is now under review by Ofcom, the regulator.

Channel 4 said that it “always recognised the Commission might include” an inquiry into whether it should receive the cash. It said: “As their statement makes clear, this is a specific proposal to examine the Government’s plan to fund Channel 4’s switchover costs and they do not oppose state funding for broadcasters in principle.”

If Channel 4 can demonstrate that it has no option but to take a public subsidy in order to survive, that would mean that it would qualify.

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