Writing in the Financial Times, Thompson said that potential mergers offered a better solution to the funding crises afflicting Channel 4 than simply taking part of the BBC's licence fee.
"Not only is top-slicing [the BBC licence fee] an inadequate response to these problems, it risks undermining the last strong part of the system and breaking the connection in the public's mind between the licence fee and the BBC.
"Consolidation could offer the prospect of both short and long-term benefits -- immediate cost savings and an increase in scale in key markets from advertising sales to programme acquisition, but also the chance for a smaller number of larger players to focus on credible and affordable digital plans.
"If the goal is sustainable PSB beyond the BBC in the long term, consolidation may be part of the solution."
Channel 4 faces a £150m financial shortfall and the Government is looking at a number of options to help the publicly-owned broadcaster.
These options include a possible privatisation and giving the channel a slice of the BBC licence fee or raising more public cash.
Lord Carter of Barnes, the newly-created communications minister, is considering the options as part of his Digital Britain review, which will decide the fate of Channel 4, which is suffering from a declining TV ad market and funding uncertainty.
In September the broadcaster announced plans to axe 150 jobs to save £100m over this year and in 2009.
The idea of a merger between Channel 4 and Five re-emerged last month when German media group RTL, which owns Five, was linked to a £500m takeover bid.
RTL has apparently asked investment bank JP Morgan to look into a bid.
Talk of a takeover came four years after the two last held merger talks. This time around the situation is far more pressing.
Thompson concluded that it was critical that the industry takes steps towards major restructuring without which, he said, it cannot thrive in the UK or compete internationally.
"Let us avoid the temptation to create yet more new entities and new structures.
"What UK broadcasting needs is the same as the rest of the economy -- simplification, consolidation and the right kind of public-private collaboration.
"Much of the solution will come from making sense of existing pieces not inventing new ones. This year I hope we see that solution take shape.
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