An out-of-control BBC and addiction to central planning by regulators are damaging democracy and media choice in Britain, James Murdoch said in Edinburgh last night.

Giving the annual MacTaggart lecture to an audience of television executives, Mr Murdoch, 36, the son of Rupert Murdoch, called for a “dramatic reduction of the activities of the State” in broadcasting, arguing that it effectively treated viewers like children.

He contrasted the prevailing political attitude to mainstream broadcasting with the lightly regulated newspaper, film or book industry where consumer choice predominates.

Mr Murdoch, chief executive of the European and Asian operations of News Corporation, parent company of The Times, said: “In the regulated world of public service broadcasting, the customer does not exist: he or she is a passive creature — a viewer in need of protection.

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“In other parts of the media world, including pay television and newspapers, the customer is just that: someone whose very freedom to choose makes them important.”

He said that the “chilling” expansionism of the BBC meant that commercial rivals and consumer choice were struggling. In particular the “expansion of state-sponsored journalism” in the form of BBC News online was “a threat to plurality and the independence of news provision, which are so important to our democracy”.

Mr Murdoch criticised Radio 2’s effort to woo younger listeners by hiring presenters such as Jonathan Ross on “salaries no commercial competitor could afford”.

“No doubt the BBC celebrates the fact that it now has well over half of all radio listening. But the consequent impoverishment of the once-successful commercial sector is testament to the corporation’s inability to distinguish between what is good for it and what is good for the country.”

Mr Murdoch’s lecture comes 20 years after his father, the chief executive of News Corp, made a wide-ranging attack on the BBC and the British television establishment. However, this speech fell short of calling for specific cutbacks to the BBC or other changes in broadcasting policy, so as to concentrate on first principles.

He said: “The consensus appears to be that creationism — the belief in a managed process with an omniscient authority — is the only way to achieve successful outcomes. There is general agreement that the natural operation of the market is inadequate, and that a better outcome can be achieved through the wisdom and activity of governments and regulators. This creationist approach is similiar to the industrial planning which went out of fashion in other sectors in the 1970s. It failed then. It’s failing now.”

Defending the BBC, Sir Michael Lyons, the Chairman of the BBC Trust, said that its licence fee funding system meant that it “has no choice but to serve all audiences, but that doesn’t meant that it can or should seek to squeeze out other providers”.

He added: “We have to be careful not to reduce the whole of broadcasting to some simple economic transactions. The BBC’s public purposes stress the importance of the well-tested principles of educating and informing, and an impartial contribution to debate.”

Ofcom, the communications regulator, was criticised by Mr Murdoch for intervening “with relish” whenever it had the opportunity and producing adjudications on what broadcasters “can and cannot say” amounting to “roughly half a million words” long. Its activities included “the no doubt vital guide on ‘How to Download,’ which teenagers across the land could barely have survived without”.

He stopped short of calling for the abolition of Ofcom but said that its activities needed to be reduced “to contemplate intervention only on the evidence of actual and serious harm to the interests of consumers”.

Mr Murdoch, who is also the chief executive of BSkyB, 39.1 per cent owned by News Corp, made clear that he believed that broadcasters such as Sky should be freed from the long-standing requirement to produce impartial news.

He argued that “the mere selection of stories and their place in the running order is itself a process full of unacknowledged partiality”. The impartiality rule was “an impingement on the freedom of speech”.

Ofcom said that it welcomed Mr Murdoch’s contribution. It was “committed to its duty to protect consumers’ and viewers’ interests and to promote competition and innovation based on thorough and objective evidence and analysis”.

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