The Guardian owner responded today with a public response to the DCMS's interim Digital Britain report (published last week), describing proposals to merge Channel 4 and BBC Worldwide as "flawed on a number of levels".
The Scott Trust-owned media group said that it had serious concerns about the proposed "second public service content company, or PSB2".
It argued that such an entity would undermine, rather than sustain public service plurality and added it would not solve Channel 4's £150m funding shortfall.
The 17-page GMG document said the media market should instead be allowed to "deliver public service content before public intervention is applied", arguing that areas such as online content needed time to adapt to the "unfolding effects of convergence".
The Guardian paper said: "We are particularly concerned that the entity envisaged in the Digital Britain interim report -- based on a joint venture between BBC Worldwide and Channel 4 -- will inevitably seek to expand aggressively online in the UK, exploiting both BBC and Channel 4 brands."
The joint venture would also create "fundamental distortions in the advertising sales market", creating a "cross-promotional powerhouse that would divert ad revenues away from commercial players".
By merging BBC Worldwide's and Channel 4's sales houses would give the combined entity greater bargaining power, "placing competing sales houses at a considerable disadvantage".
However, GMG did welcome some aspects of the proposals.
It agreed with the assertion that public intervention was needed to fill gaps in public service content provision like local and regional news, in which GMG holds significant interests.
Local and regional news is "becoming less commercially attractive", the media owner said, and called for merger rules to be relaxed.
A decision on Channel 4's future direction is expected to be made by the government in May.
.jpg)
.jpg)