Channel 4 celebrates government U-turn on privatisation

Channel 4 has praised the government’s U-turn on its proposed privatisation, claiming that staying in public ownership will enable the broadcaster to become “more of a power in the digital world.”

The decision to scrap the privatisation plan will provide a firm basis for the “sustainable direction of Channel 4, safely in the hands of the British people”, the broadcaster insists.

Arguing that British content and impartial news have “never been more vital”, Channel 4 says it wants to focus on discovering new voices and strengthening its “precious link” with the British public.

“I am personally delighted that we will be able to do more, making positive change for the people that others don’t fight for,” says CEO Alex Mahon.

She argues Channel 4 will be able to “move faster, invest more, take more risks, break down barriers and push boundaries” by staying in public ownership. According to Mahon, the broadcaster is keen to reach young and underrepresented people in the digital era, as well as reflecting “the whole of the UK on screen” by growing its impact across the nations and regions.

Ad industry ‘delighted’ by recommendation to keep Channel 4 public

The prospect of a government U-turn was first raised yesterday (4 January) in a leaked letter from Culture Secretary Michelle Donelan to Prime Minister Rishi Sunak. After reviewing the business case, she concluded that “pursuing a sale at this point is not the right decision, and there are better ways to secure [Channel 4’s] sustainability and that of the UK independent production sector.”

Donelan’s recommendations went against the views of her predecessors Oliver Dowden and Nadine Dorries, the latter having claimed public ownership was “holding Channel 4 back” from competing with the likes of Netflix and Amazon.

However, the Department of Digital, Culture, Media and Sport (DCMS) has confirmed the broadcaster will remain in public ownership, as part of a deal focused on providing “greater commercial flexibility”, increased investment in skills and generating jobs across the UK.

A cornerstone of the deal is a decision to relax publisher-broadcaster restrictions, meaning under current legislation Channel 4 is limited in its ability to make its own content.

DCMS claims this model makes the broadcaster “more reliant on advertising revenue than many of its competitors”. The intention is to help Channel 4 diversify its revenue by investing in content production. To achieve this the government is planning changes to the Media Bill, which will include as yet unspecified “measures to modernise decades-old broadcasting regulations”.

Calling Channel 4 a “British success story”, Donelan claims the decision not to sell will create “huge opportunities” across the UK through the broadcaster’s commitment to double its skills investment to £10m by 2025 and double the number of roles it employs outside London.

Channel 4 first outlined its alternative proposal to privatisation in May last year, focused on ramping up its public contribution, creating a more distinctive British IP and “levelling up” the creative sector with new jobs and training across the UK.

‘Delighted’

The news yesterday of Donelan’s recommendation to stop the sale was widely welcomed by the advertising industry.

ISBA director general Phil Smith said advertisers would “be delighted” by a decision for the broadcaster to remain public.

“The culture secretary’s review of the business case has clearly concluded that no convincing arguments for privatisation exist,” he said, adding ISBA believes changes to the business model, rather than ownership, is what Channel 4 needs.

For those planning advertising, a decision for Channel 4 to remain in public hands brings “certainty” and will create an environment for “future investment”, Smith added.

Part of Donelan’s reasoning against privatisation, laid out in yesterday’s letter, was her belief it would have a negative impact on the UK’s independent production sector, worth an estimated £3bn. IPA director general Paul Bainsfair welcomed this assessment.

“It is also worth highlighting that this symbiotic relationship of public service broadcaster (PSB) and independent production ecosystem is underpinned by advertising,” he said.

Bainsfair backed Mahon’s assessment that remaining in public ownership will allow Channel 4 to become increasingly important in a digital world, stating the broadcaster is “well positioned for continued success”, with a strong leadership team, innovation as a priority and a “market leading” broadcast video-on-demand (BVOD) service.