Channel 4 privatisation proposal: ‘This could prove irreversible’

When the government decided to abandon its most recent attempt to privatise Channel 4 the rationale given was that the broadcaster was a “precious public asset”, a view backed up with the promise that it would “continue to be owned by the country”.

Four years on and the government’s new consultation on the future of Channel 4 positions a sale of the broadcaster almost as a necessity, it needing a vital cash injection and changes to its non-profit remit to compete against the deep-pocketed global streaming behemoths such as Netflix.

The government argument is that Channel 4, a commercial channel owned by the government, is overly dependent on advertising – which accounted for 91% of the broadcaster’s £934m revenues last year – and far too vulnerable with traditional audiences increasingly shifting to digital services.

New capital, and a change in remit to allow Channel 4 to own the valuable rights to programmes it commissions, such as Come Dine With Me and Undercover Boss, could make the relative minnow formidable on the global stage.

But Channel 4 says that its unique model, which has allowed UK independent TV producers to flourish by exploiting rights to their shows internationally, is not broken. Viewers of the broadcaster’s traditional television channels and its catch-up service, All 4, grew by 2% and 26% respectively last year, and by 4% and 40% in the first half of this year. The broadcaster is on track to break £1bn in revenues for the first time this year.

“What’s the analysis to show [that privatisation] makes us stronger?” Alex Mahon, the chief executive of Channel 4, asked as she gave evidence to the Commons culture committee on Tuesday. “We’ve got to be careful of doing anything that might be irreversible.”

The privatisation knives have been sharpened for Channel 4 about half a dozen times since its creation under Margaret Thatcher’s government in 1982. The culture minister, John Whittingdale, who is spearheading the latest review, just as he did the last one in 2016, first agitated for privatisation in the 1990s.

The move on Channel 4 comes couched as part of a wider review into public service broadcasting that includes proposals to make streaming broadcasters subject to the same regulations as traditional UK broadcasters.

The issue was thrust into the spotlight last year when viewers, outraged at perceived inaccuracies in Netflix’s drama The Crown, found that Ofcom, the UK regulator that enforces the broadcasting code, was powerless to investigate.

The “light touch” regime that governs streaming services, the Audio Visual Media Services regulations (AVMS), does not seek to manage harmful and offensive material, accuracy and impartiality in the way Ofcom’s broadcasting code does for UK linear channels. And, in any case, the AVMS rules do not apply to operators with headquarters outside the UK, such Netflix, which has its European base in the Netherlands.

The government’s proposals aim to “level the playing field” by making all streaming services subject to the broadcasting code. That would give the regulator a say on shows such as Netflix’s controversial but popular Seaspiracy, which was accused of misrepresentation by its participants.

Another focus is extending the vital “due prominence” legislation that rewards the BBC, ITV, Channel 4 and Channel 5 with the top slots on TV programme guides in return for investment in often commercially unattractive, but important, public service content. Traditional broadcasters believe it is commercially imperative the rules that give public broadcasters prominence are extended to smart-TV interfaces, and top billing on streaming and on-demand services such as Sky Q and Netflix.

The culture secretary, Oliver Dowden, has said the overall review aimed to create a “fair and well-functioning system … fit for the 21st century”. The question is what part will Channel 4 play under private, very possibly foreign, ownership.

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