British public service broadcasters (PSB) such as ITV (LON:ITV) and the BBC are serving viewers well but the industry needs to adapt to challenges from the online revolution, watchdogs said on Thursday.
Regulator Ofcom said a review had found that the PSB broadcasters, including the BBC, ITV, STV, UTV, Channel 4, Channel 5 and S4C, had continued to make a significant contribution to UK broadcasting.
It said viewers valued PSB programmes, and audience satisfaction was high.
Close to eight in ten viewers (79%), up from 69% in the last Ofcom review in 2008, believe PSB is delivering on its purposes - such as trustworthy news and high quality programmes that reflect the UK.
Over half of all TV viewing is to the main PSB channels - BBC1, BBC2, ITV, UTV, STV, Channel 4 and Channel 5 - rising to over 70% when all the channels broadcast by PSBs, such as time-shifted '+1' channels, are taken into account.
The PSBs contribute significantly to programme creation in the UK. In 2013, they invested just over £2bn in new UK material, not including sport, compared to around £350mln from non-PSB sources.
But Ofcom said broadcasters need to adapt their strategies to the increasing tendency among viewers, particularly the young, to watch programmes online, on-demand and on devices such as tablet computers.
Since 2008, PSB investment in new UK programming including sport has fallen about £440mln or 15% in real terms between 2008 and 2014.
Ofcom believes broadcasters need to adapt their models to maximise commercial revenues and efficiencies, and the PSB system needs to evolve as the trend towards online viewing grows.
Otherwise, PSBs are likely to face difficult choices about which programming and services they are able to fund, it said.
The regulator said policymakers needed to consider whether factors that help PSB such as the BBC's licence fee are still effective in the Internet era.
It said the issue of the licence fee would be taken care of by the forthcoming BBC charter review, but it said ministers should consider updating the framework under which Channel 4 Corporation delivers its PSB remit to ensure it can meet the needs of younger audiences, whose media consumption habits are changing quickly. This could include allowing C4 to make its output available across media other than its core TV channel.
Some PSBs want subscription TV services to pay to carry their channels - so called 'retransmission fees'.
Ofcom said these fees could bring additional funding for PSBs, but resolving any possible disagreements would probably require complicated and lengthy regulatory intervention.
"There is currently no guarantee that all fees would be spent on public service programmes," it said. "The Government has consulted on the question of retransmission fees."
Ofcom chief executive Sharon White said: "Public service broadcasting continues to provide TV enjoyed and valued by millions of viewers across the UK.
"More people are watching online or on demand, and this presents challenges as well as opportunities for public service broadcasters. They must continue to find new ways of connecting with audiences, and the PSB system needs to evolve to ensure it remains effective in the digital age."