Managing Channel 4's inevitable decline in its current form would be Ofcom's default preference if its proposed new PSB rival to the BBC proves unworkable.

Ofcom chief executive Ed Richards has effectively drawn a line under the two remaining options - direct public funding or stripping C4 of its remit to become a purely commercial broadcaster, most likely in private hands.

This would leave an option to retain C4's existing remit and PSB status but in which its ability to deliver would steadily erode.

Richards issued a rallying cry for the industry to get behind the proposal for a new PSB entity with C4 at its heart, propped up by partnerships, joint ventures or potential mergers with a body such as BBC Worldwide or Five.

The proposal is subject to further government scrutiny on risk and competition grounds and will also be subject to continued lobbying from interested parties.

In a thinly-veiled dig at the in-fighting between senior executives at the PSBs in the run-up to the publication of Ofcom's final statement, Richards said: “Now is the time for key broadcasters to step up to the plate and see if this can be achieved and to take a slightly broader public interest perspective as well as a corporate perspective.

“We want to concentrate people's minds - this cannot go on forever - decisions need to be arrived at.”

He added: “We've spent 12 months working with people across the industry seeking their views. In the last week alone we've had a more fevered outbreak of honest views than we've had at any other time.”

Richards said it was not Ofcom's place to tell broadcasters' stakeholders which companies C4 should partner with, adding that the issue had to be “eased into and examined in a more detailed way”.

But he accepted that there would be “acute” differences between C4 and Five that could create tension.

A BBCW/C4 tie-up, however would need “careful design” to ensure that C4 directed the PSB aspect of the partnership rather than the BBC.

The difficulty for any partnership, he said, would be ensuring that the new body would combine financial stability and public purposes.

Richards said the report started out by addressing the audiences' needs rather than to find ways of “saving” C4, and stressed that in no way was Ofcom saying any one broadcaster had failed.

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