The European Commission may put a stop to the £14 million in funding that Ofcom has proposed giving Channel 4 to help it pay for its switch to digital and its ensuing public service broadcasting (PSB) commitments, the Guardian claims. In a letter sent to foreign secretary David Miliband this summer, and seen by the Guardian, European competition commissioner Neelie Kroes suggested that Channel 4 had “enough reserves and revenues” to pay for its digital expansion without state help. The commission is investigating Ofcom’s proposed aid to C4, after a competing UK broadcaster filed a complaint in 2006. In her letter, Kroes said that the commission had “doubts as to whether the financial support pledged for C4 is necessary and proportional,” especially as the government itself found that C4 had cash reserves of £170 million, with an average capital balance of £137 million throughout 2007. The letter noted, “The mere fact that the switchover may affect its profitability (but not viability) does not constitute a valid reason for claiming state funding.” C4 has been arguing for some time that it’s facing a £100 million shortfall thanks to its digital investments and falling ad sales. It has also announced that it will make cuts of £100 million by the end of 2009.

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