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EU probes Channel 4's digital handout

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The European Commission is to investigate whether a state grant to Channel 4 distorts competition in the UK TV market.

Channel 4 receives no public funding, but nevertheless will receive a £14m grant to help it with the move to digital broadcasting. A commercial rival has complained that since Channel 4 had sufficient cash to meet the capital costs, it didn't need any taxpayers' money.

The hand-out is justified on the basis that Channel 4 is a public service broadcaster, so it needs to be able transmit its high quality material, such as Celebrity Big Brother and week-long Wankathons, on new digital platforms.

"The information provided so far by the UK does not enable the commission to assess whether, given the costs of its digital switchover obligations and taking into account its commercial revenues, Channel 4 will have in the short term a net public service cost which would allow it to receive state aid," the EC said today.

Channel 4 is not skint. The corporation ended 2005 with an annual profit of £99m on sales of £894m, with £167.9m cash in the bank.

The Competition Commission also said today it is investigating the nationalisation of Northern Wreck. Of course, nothing distorts a market like knowing you can drive a business into a wall, and then be rewarded for failure. ®

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