The Committee say that there would be dangers if the BBC were even more dominant in the provision of news and current affairs. They add that such a position would also be bad for "independent producers, actors, and other suppliers, who would suffer all the disadvantages of dealing with a monopoly commissioner".
The Committee says that intervention is justified to ensure that there is sufficient free public service provision. They emphasise that it is vital that there should be as much clarity as possible about the financial position of all the public service broadcasters and propose an independent financial review of Channel 4.
The "corporate engineering" proposal to merge Channel 4 and BBC Worldwide is rejected by the committee. They say that a less disruptive option would be to progress the partnership proposals put forward by the BBC. At the same time a solution needs to be found to the problems of ITV which is a crucial public service broadcaster.
The Committee welcomes the partnership proposals now being advanced by the BBC but says that they are unlikely to be enough to solve the financial problems. They propose in addition the setting up of a limited fund to which broadcasters and programme makers could apply. Contestable funding, they say, has a number of advantages over structural change and has a long history in UK broadcasting.
The fund would not require additional taxpayer support. One proposal is that money from the licence fee which is now being spent on digital switchover should be paid into the fund when the digital switchover programme ends in 2012. The Committee says that ultimately a greater element of the licence fee may need to be redirected.
The Committee ends by saying that the changes taking place in broadcasting today affect the public directly. They say that they do not accept that the interests of the licence fee payer should be the exclusive responsibility of the BBC Trust: "The only truly representative body is Parliament". The Committee proposes that the BBC should be established by statute rather than the undemocratic Royal Charter.
Lord Fowler, Chairman of the Committee, said:
"We do not want to go back half a century to a time when the BBC was the monopoly provider of public service broadcasting. That would be bad for the public and bad for the BBC. Today ITV regional television news is under threat –at the same time as regional newspapers are struggling to survive – and new UK drama is being cut back. Channel 4 forecast major problems unless action is taken.
"The case for some kind of intervention has been accepted by Ofcom and the Government and their favoured solution is a merger of Channel 4 and BBC Worldwide. We did not see the logic of this ‘corporate engineering’ proposal which does nothing to solve the wider problems in the commercial sector.
"We believe that more partnerships between the BBC and other companies including Channel 4 are essential. In addition we want to see a limited fund set up to which broadcasters could apply for help in programme making. Contestable funding of this kind is a more flexible solution than creating a new organisation with all the potential problems that involves."