Yesterday, Tessa Jowell, secretary of state for culture, media and sport, told a media conference at Westminster that she needed further assurances from the BBC about how much it would impinge on commercial revenues.
Speaking at the same conference, Davies said: "Without BBC3, our digital proposition looks much less compelling and analogue switch-off looks that much further off."
Jowell said yesterday that the BBC and the Independent Television Commission had to work together to settle a discrepancy over how much BBC3 would cost the commercial sector.
At present, the BBC estimates it will take around £4m of commercial revenues, while the ITC's figure stands at £25m.
To this, Davies told the conference that the BBC "could not be blamed for the recent decline in the advertising market".
Jowell has told the BBC to work with the ITC to try and bring those two figures slightly closer together before she will authorise BBC3.
The BBC has recently come under fire for carrying too much mass-market programming, which has traditionally been broadcast on commercial channels that rely heavily on these types of shows for their revenues.
In response to these calls, Davies said: "Distinctiveness and near universal reach are both critical objectives for us, but I do want the BBC to remain, in the digital age, a mass-market public service broadcaster, not one confined to a tiny corner of the market."
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