ITV 'needs more funding' for news

The cost of the licences that allow ITV to broadcast regional news in the UK will outweigh the benefits by 2012, according to watchdog Ofcom.

This is because of the proliferation of digital TV channels that can broadcast news without paying for the licences.

Ofcom says that new funding will be required if regional news is to be maintained on ITV.

ITV is currently in talks with Tony Ball, former boss of BSkyB, about him becoming chief executive.

The Ofcom findings refer to the Channel 3 regional licences that allow ITV in England and Wales, UTV in Northern Ireland and STV in Scotland to broadcast terrestrially.

They come with a number of public service broadcasting obligations, including a requirement to provide regional news services.

"As the digital TV roll-out gathers pace across the UK, the value [of the licence] is declining," said Ofcom.

"The Channel 3 network licences could be in deficit to the tune of £38-£64m by 2012," it added.

New boss

ITV is struggling to cope with increased competition from digital channels and with a massive downturn in advertising revenue during the downturn.

In the first half of this year, the broadcaster made a pre-tax loss of £105m.

It is currently searching for a new chief executive, one it hopes will restore the company to profitability.

One month ago, it made an offer to Tony Ball, the former boss of BSkyB, but the level of incentives he was looking for have proved to be a sticking point in negotiations.

Last week, the Competition Commission decided that rules on how much the broadcaster can charge advertisers cannot be removed.

ITV had campaigned for the rules to be dropped, arguing that new digital channels mean it should no longer be subject to the restrictions.

But the commission found that the broadcaster still enjoyed a dominant position in its marketplace.

It did, however, say it may adapt the rules to reflect increased competition.