The fattest cats get together

Observations on broadcasting

Suddenly, British television seems set to be transformed. Licences for an over-the-air digital service, to replace ITV Digital, will be allocated on 4 July. They were expected to go to a coalition of Britain's public and private broadcasters, who would have taken on Rupert Murdoch's BSkyB satellite system. Then the BBC deserted its British partners to cut a deal with Sky. A new BBC/Sky proposal would give the BBC more capacity and shut out channels operated by Sky's pay-TV competitors, such as Channel 4's E4 and FilmFour.

An ITV/Channel 4 bid is still on the table, but few fancy its chances. Without the BBC, the home team looks too much like the one that brought us the ill-fated Monkey. Sky, however, has proved it can make digital work, while the BBC's licence fee would underpin funding. The Independent Television Commission, which must make the choice, dares not risk another flop: too much is at stake.

The government wants to shut down conventional analogue broadcasting by 2010, and sell the freed airwaves. For this to happen, we all need to have switched to digital by that date. So far, only 40 per cent of British households have done so, and it is now clear that many of the rest will never pay for costly satellite or cable services. Over-the-air digital, needing only an ordinary aerial and a £100 set-top box, might just tempt the refuseniks.

This means not only that the BBC and Sky are likely to emerge as the winners of 4 July, but that they can look forward to government help, perhaps including the subsidy of set-top boxes. While dominating the transition to digital, they will also benefit from other recent developments.

Last month's Communications Bill surprised many by clearing the way for Murdoch's entry into conventional television. He will be allowed to buy Channel 5, with which, using his deeper pockets, he will be able to squeeze Channel 4 and ITV on their core territory. Then the bill's author, the Culture Secretary, Tessa Jowell, let slip that the review of the BBC charter promised for 2004 will be a sham.

The licence fee, already yielding £2.5bn a year and pledged to grow faster than inflation, is safe for another 15 years, according to Jowell. Commercial operators are already being pushed out of markets like children's broadcasting by licence-fee-funded competition. Now they will lose the chance to challenge BBC expansionism, which a genuine review would have provided.

Meanwhile, the collapse of advertising revenue that is already devastating ITV and Channel 4 is expected to worsen in the face of irreversible technical change.

In the past, Murdoch has despised the BBC and the BBC has feared Murdoch. However, as last week's Hitler-Stalin pact shows, the emerging carve-up suits them both. Murdoch will make lots of money (mostly from pay-TV), and the BBC's elephantine empire (based on free services) will grow yet bigger. Murdoch's grip on Britain's cultural life will become more complete, and an attack on the licence fee by some future government will become harder to mount.

The Blair government also seems happy. It considers Murdoch as someone with whom it can do business, and finds the crony-run BBC more manageable than Channel 4 (think Rory Bremner) or ITV (remember Spitting Image?).

Viewers and citizens, however, have less cause to celebrate. Up till now, it is creative competition that has sustained British broadcasting. If it is to continue to entertain us, inform us and help keep us sane, what it needs is pluralism, not a cosy condominium run collusively by the fattest of the public and private cats.