LONDON, April 27 (Reuters) - Britain's government set out plans to sell Channel 4, the publicly owned but commercially funded broadcaster established in the 1980s, in a shake-up of broadcasting policy published on Thursday.
Streaming services such as Netflix, Amazon Prime and Disney+ will also face tighter regulation, with new rules on offensive material, accuracy and privacy similar to those for traditional broadcasters, it said.
Channel 4 was created by Conservative Prime Minister Margaret Thatcher's government to deliver an edgy alternative to the BBC and ITV, with a focus on under-served audiences.
With no in-house production, it played a key role in establishing Britain's independent programme making sector.
The broadcaster's management, lawmakers across parliament and television grandees oppose a sale, saying it would jeopardise Channel 4's distinctive programming.
Britain's Media, Data and Digital Infrastructure minister Julia Lopez said public service broadcasters such as Channel 4 delivered high-quality content, but the industry had changed beyond recognition with the rise of U.S. streaming giants.
She said the government wanted to overhaul decades-old broadcasting regulations to put traditional broadcasters like the BBC, ITV and Channel 4 on an even playing field with Netflix, Amazon Prime and others.
"The sale of Channel 4 is just one part of that major piece of reform," Lopez told lawmakers on Wednesday, adding that the channel had "few options to grow, to invest and to compete" under public ownership.
"This government believes it's time to unleash the broadcaster's full potential and open Channel 4 up to private ownership and investment, while crucially protecting its public service broadcasting remit," she said.
Channel 4 said it would respond after studying the policy paper, which is titled "Up next - the government's vision for the broadcasting sector".
"However, Channel 4 remains committed to upholding and maximising its remit and public service purpose that has enabled it to shape Britain's creative culture and make a significant contribution to the creative industries, while also investing... to create local and regional economic and social benefit," a spokesperson said.
The new rules for streaming services will be drafted and enforced by regulator Ofcom, the government said, and breaches could result in a maximum fine of 250,000 pounds ($311,725) or up to 5% of an organisation's turnover.
The remit for public service broadcasters will be changed to focus on making programmes that reflect British culture, support production in Britain and provide impartial news.
The government said it would also legislate to ensure public broadcaster content was always carried and easy to find for British audiences on connected devices and online platforms.
A spokesperson for ITV, Britain's biggest free-to-air commercial broadcaster, said many of the proposals, notably reform to prominence and inclusion rules and a more flexible approach to remits, looked "very sensible".
The BBC did not respond to a request for comment. ($1 = 0.8020 pounds) (Editing by Kylie MacLellan, Alexander Smith, Alexandra Hudson)
ITV (ITV)