Lord Carter of Barnes, the newly created Communications Minister, expects to hire a bank to help to value Channel 4, and he will consider privatisation to help to resolve the broadcaster's financial problems.

The peer, who must decide how to deal with an expected shortfall in the broadcaster's finances, which could amount to £150 million a year, is expected to make a final recommendation next year as part of his Digital Britain review. Until now, the future of Channel 4 has been under examination by Ofcom. However, the regulator cannot make any of the legal changes that would be required to safeguard the future of the Big Brother broadcaster.

Ofcom has also focused on raising cash from public sources, including top-slicing the BBC licence fee, in its examination of how to plug the gap. However, Lord Carter's intervention makes it clear that a privatisation or a partial share sale is being considered.

Lord Carter told The Times that, although Ofcom's view “was an important one”, it was not the only advice he would take into account regarding the broadcaster, which has been state-owned since its inception 25 years ago.

When asked whether he would engage a bank to determine whether a sale or partial sale would be a viable alternative to a bailout, Lord Carter said: “I'm sure I'll be getting that sort of advice.”

A difficulty for ministers is the deteriorating value of Channel 4, which lost £20.6 million last year amid falling television advertising and heavy digital investment. As recently as 2004 it made £44.6 million. However, it ended last year with £195.2million in the bank, and it would be possible to run the broadcaster's schedule more commercially. ITV is valued at £2 billion, including £668 million of debt. With no production business of its own, and given the losses, Channel 4 would have to be valued at a discount. However, taking account of its cash pile and scarcity value, the price could exceed £500 million.

Channel 4's position is complicated because it is not obvious how the funding gap could be plugged. Funding the broadcaster from a tax on television sales or some other form of consumer levy is unlikely to win ministerial approval and the BBC is vehemently opposed to sharing licence fee cash. A transfer of public money would also have to be consistent with European Union state aid rules; already, the European Commission is unhappy about £14 million of help coming from the BBC to deal with the digital switchover.

A private sector solution is further complicated by Labour's 2005 manifesto commitment to keep the broadcaster in public hands.

Lord Carter said that he would examine the conclusions of Ofcom's review of public service broadcasting, but added that he would weigh “first whether there is a financial gap before considering funding solutions”. He declined to rule out plugging the gap by top-slicing the BBC licence fee, saying only that “I've seen the lively debate about that subject so far”.

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