UPDATE 2-Sarkozy confirms telecoms tax to fund public TV

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By James Mackenzie

PARIS, June 25 (Reuters) - Advertising on French public television will be phased out starting next year and the funding made up through a levy on telecoms operators and private broadcasters, President Nicolas Sarkozy said on Wednesday.

The plans, which have been criticised by telecoms operators and the European Union, are part of a wider overhaul of the sprawling French public broadcasting system proposed by a special parliamentary commission appointed in February.

"France needs a balance between public channels and private channels," Sarkozy said in a speech outlining the proposals of the commission, headed by Jean-Francois Cope, leader of the parliamentary group of the centre-right UMP party.

"We have to allow the private channels to develop and at the same time we have to give France Televisions the means of offering quality programmes to as many viewers as possible."

The Cope report, which described the current structure of French public television as a "house of cards," said the revolution created by digital broadcast technology and the Internet meant the sector needed an overhaul.

Under the proposals announced by Sarkozy, advertising on public television would not be allowed after 8:00 p.m. starting Jan 1, 2009, and would be banned entirely from December 2011.

The move will create a giant funding gap for the four main channels controlled by France Televisions, which raised 834 million euros ($1.30 billion) from advertising and sponsorship in 2006, almost one-third of its total revenue.