The government in the United Kingdom is to press ahead with plans to privatise Channel 4, despite widespread opposition, even from among the Conservative party. Approaching its fortieth anniversary, the publicly owned broadcaster has pioneered much distinctive programming and done much to establish an independent production sector. The sale of the public corporation, which opponents have described as an act of “cultural vandalism”, is far from a foregone conclusion.
The news came shortly after the appointment of Sir Ian Cheshire, a British businessman, as the chair of Channel 4.
Nadine Dorries, the culture secretary, who approves the appointment, which is made by the communications regulator Ofcom, said “Sir Ian has an impressive record at the helm of some of Britain’s biggest businesses and I am confident his proven leadership will help Channel 4 go from strength to strength and ensure it thrives long into the future amid a time of rapid change for the sector.”
She then announced on social media that “I have come to the conclusion that government ownership is holding Channel 4 back from competing against streaming giants like Netflix and Amazon.” She went on to say that “A change of ownership will give Channel 4 the tools and freedom to flourish and thrive as a public service broadcaster long into the future.” She will set out the plan for Channel 4 in a white paper, likely to be announced next month in the Queen’s speech setting out the government agenda.
Giving evidence to a cross-party committee in November, the culture secretary had appeared confused about how Channel 4 is funded, saying that it was “in receipt of public money”. Fellow conservative MP Damian Green pointed out that: “Channel 4 is not like the BBC. It’s not in receipt of licence fee money. It makes its money from commercial operations.” To which Nadine Dorries could only respond “And, so, although its, yeah, and, but…”, sounding rather like Vicky Pollard in a Little Britain sketch.
Established by the Conservative government in 1982, The Channel 4 Television Corporation is uniquely owned and paid for by the public. The treasury classifies Channel 4 as a “self-financing public corporation”. It does not receive any television licence fee income and is funded through commercial activities, mainly advertising. It pays tax on profits and invests any surplus in programming. Although any borrowing counts as government borrowing, there is no evidence that the government has ever had to cover any debt.
The Department for Digital, Culture, Media and Sport consulted on the possible change of ownership of Channel 4 in 2021 and was inundated with submissions. It says on its web site that it is still analysing the feedback.
Channel 4 presented its own case for a joint venture partnership with private investors to keep any borrowing of the public sector balance sheet, with proposals to allow it to benefit from the sale of resulting secondary rights.
Channel 4 said in a statement: “With over 60,000 submissions to the Government’s public consultation, it is disappointing that today’s announcement has been made without formally recognising the significant public interest concerns which have been raised.”
The corporation went on to observe “The proposal to privatise Channel 4 will require a lengthy legislative process and political debate. We will of course continue to engage with DCMS, Government and Parliament, and do everything we can to ensure that Channel 4 continues to play its unique part in Britain’s creative ecology and national life.”
The sale of Channel 4 could generate about a billion pounds, which the government suggests it would invest in independent production in priority parts of the country.
Acquisition by another broadcaster like ITV or Sky, could present competition issues if it led to a dominant share of the television advertising market, of which the Channel 4 sales house accounts for about a third.
Alternatively, the government could seek a public flotation of the corporation to take it off the public sector balance sheet.
Channel Four has been doing rather well in the face of competition from the likes of Netflix and Amazon, which distribute many of its commissioned programmes. Its own All 4 offering has the largest library of free online video in the country.
In its most recent annual report, the corporation reported revenues of £934 million and a pre-tax surplus of £74 million, with cash reserves of over £200 million. That is a drop in a bucket compared to spending by Netflix or Amazon, or indeed government finances, but Channel 4 punches above its weight in cultural influence. Its socially liberal outlook has often caused consternation to conservatives.
Any change in ownership would be likely to result in its output becoming more commercially focused. As it is, Channel 4 makes a unique contribution to the media landscape in the United Kingdom. It is not broke, and there is no reason to break it.