Five chief executive Jane Lighting is studying the ITC draft

The Independent Television Commission has advised the network of its terms for allowing it to continue broadcasting until 1 April 2012.

It is seeking �4.4m per year, plus 8% of the channel's revenues from advertising and sponsorship.

Under the current terms of the licence, Five, formerly Channel 5, has paid a one-off fee of at least �22m a year since it went on air in March 1997.

The payments relate solely to Five's analogue service, and not the station's digital output, for which it does not have to pay the ITC for a licence.

An ITC spokesman said the proposed terms would work out "markedly less" than the currrent annual fee - this year, �24.6m based on inflation.

The terms have been derived from a realistic assessment of the value of the licence in an increasingly competitive market Sir Robin Biggam ITC chairman

He said as analogue viewership declined over the next 10 years, advertising revenue from it would fall proportionately - making the 8% revenue fee smaller as a result.

Over the same period, revenue from digital broadcasting was expected to increase as the medium grew in stature.

ITC chairman Sir Robin Biggam said it was seeking "a fair return" for the Treasury from Channel 5.

He said: "The terms have been derived from a realistic assessment of the value of the licence in an increasingly competitive market."

Channel 5 has until 14 March to say yes or no to the ITC's proposals.

On Wednesday the station was not giving anything away about its likely response.

A spokesman said: "The board of Five and its shareholders will respond to the ITC within the appropriate time frame."