The UK government is considering four options to solve Channel 4’s funding crisis, including privatisation and a potential tie-up with BBC Worldwide.

Lord Carter, minister for communications, technology and broadcasting, is likely to outline his proposals when the interim report of his Digital Britain panel is published at the end of January. Ofcom is scheduled to publish the recommendations of its public service broadcasting review around the same time.

It is understood that Carter will identify four options for the future of Channel 4, which has claimed it will suffer a funding gap of £150 million a year by 2012 because of the advertising downturn and structural change in the industry because of the rise of digital media. These options are understood to be privatisation, a merger with Channel Five, a tie-up with BBC Worldwide, or further public subsidy to keep it afloat.

The BBC has been privately lobbying heavily against the idea of any formal tie-up between BBC Worldwide and Channel 4, telling ministers that its rival would not bring anything to the table and that any merger would not get past European regulations.

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