Under the plans, Channel 4 may have to team up with a wing of the BBC or Channel 5 to fit in with Ofcom's plans, but it would have access to a one-off slice of BBC money to do so, Ofcom said.
The plans come in Ofcom's long-awaited review of public service broadcasting (PSB). It will be up to the Government to decide whether or not to implement the recommendations.
Ofcom said that the BBC should be at the heart of public service broadcasting in the UK, but that Channel 4 should also be made to play a vital PSB role.
Ofcom said that one of its top four priorities in the review is "to ensure there is a financially robust alternative provider of public service content alongside the BBC, with Channel 4 at its heart, preferably based on partnerships, joint ventures or mergers, with the scale necessary to sustain effective delivery of public purposes across digital media. A new remit, governance and accountability will be essential."
The review outlined two possible partnerships that could secure Channel 4's future. One is with the BBC, with Channel 4 paying to buy a stake in the corporation's commercial arm, BBC Worldwide. The other option is for the station to buy rival channel, Five.
"It may be that a one-off allocation of funding to Channel 4 could help to facilitate structural relationships, although this would be subject to broader competition policy," said the report. Elsewhere in the report, Ofcom identified any surplus in the digital switchover fund as a possible source of revenue to implement its plans.
Ofcom looked into the state of public service broadcasting because it believes that the switch from analogue to digital television will make it harder than ever for ad-funded channels such as ITV and Channel 4 to make public service material.
"The opportunities brought about by the growth of digital media also represent significant challenges to the traditional funding model for public service content made by the UK’s advertiser funded public service broadcasters (the ITV network, Channel 4 and Five)," said the report.
"These broadcasters face greater competition than ever before and growth in television advertising has stalled as investment moves to the internet. These trends represent irreversible structural changes to the broadcasting market and are significantly exacerbated by current economic conditions," it said. "This means that free-to-air advertising funded broadcasters will face growing pressure to cut back on programming with low or uncertain profitability."
Five has very limited public service obligations because it pays closer to a market rate for its broadcasting spectrum than the other channels. ITV has requested and has been granted scaled-down public service obligations.
"We believe [ITV] should be an essentially commercial network, with a modest but important public service commitment to UK originations and to UK and international news, available free-to-air across the whole of the UK," said the report.
Ofcom rejected the most ambitious proposal to address the commercial broadcasters' expected funding gap for public service material, which was to divert a portion of the licence fee to pay for public service material regardless of on whose station it was broadcast. Called 'top-slicing', this method of funding was rejected by Ofcom.
"Many people have forcefully expressed their views in the wide-ranging debate about the future of public service broadcasting," said Ofcom chief executive Ed Richards. "But there is one group whose opinions matter more than anyone else: viewers and listeners."
"Our proposals aim to sustain the quality and creative spirit of public service broadcasting while capturing the opportunities of broadband distribution, mobility and interactivity. These proposals set out what we believe is required to fulfil a vision of diverse, vibrant and engaging public service broadcasting content across a range of digital media," he said.
