The Privatisation of Channel 4

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Launched in 1982, Channel 4 is a British free-to-air public-service television network, owned by the Department for Digital, Culture, Media and Sport. Both commercially-funded and publicly-owned, Channel 4 currently receives no financial support from taxpayers, with all of its “profits”, approximately £74 million pre-tax in 2020, recycled back into commissioning programmes to help stimulate the British production sector. In 2017, Culture Secretary Karen Bradley stated that Channel 4, as a “precious public asset”, would “continue to be owned by the country”, dismissing all notions of privatisation.

However, on the 5th of April 2022, Nadine Dorries, Secretary of State for Digital, Culture, Media and Sport, declared plans to move forward with the privatisation of Channel 4. Dorries argued that “government ownership is holding Channel 4 back from competing against [other] streaming giants”. Instead, a change in ownership would provide the public service broadcaster with “the tools and freedom to flourish and thrive”.

Media analysts Enders have estimated that Channel 4 could be worth between £600m and £1.5bn, with potential buyers including UK broadcasters such as Sky or ITV, and international companies like Discovery and Paramount. Bids are forecast to come over the next 12 months, with a completion date suggested in early 2024, reports the Daily Telegraph.

The privatisation of Channel 4 has been toyed with numerous times in the past 40 years. The last attempt occurred in 2016, during which the House of Lords committee concluded that “there [were] many more risks than benefits involved”, alongside a paltry, £1bn estimated price tag. Only 6 years on, what seems to have changed?

Potential Benefits of Privatisation

Currently, Channel 4’s remit means that although it has the rights to showcase programmes on linear TV or via its UK streaming services, it doesn’t own the rights to commercialise these programmes on a global scale. In private hands, money could be made if programmes are sold to streaming services, or to broadcasters internationally. Channel 4 would also be exempt from the current legal limits on how much money it can borrow. According to the government, “There are constraints that come with public ownership, and a new owner could bring access and benefits, including access to capital, to strategic partnerships and to the international markets”. They also stated that the privatisation of Channel 4 would enable it to “compete more effectively with new players” like Netflix and Amazon Prime.

Draw Backs and Risks

However, the privatisation of Channel 4 involves great risk. With an estimated price tag of £1bn, a potential buyer will want as few obligations attached to ownership as possible. Every year, around 15 new TV production companies receive their first-ever commission from Channel 4, promoting a diverse range of programmes such as ‘Googlebox’, ‘Queer as Folk’ and ‘Derry Girls’. Yet, privatisation could ignite a move away from independent producers, instead benefiting “large profit-driven corporations”. Analysts suggest that the privatisation of Channel 4 could bring a 40% to 50% cut to its £660m programming budget. This is likely to lead to the removal of content that doesn’t provide enough income in advertising funds. As a result, analysts estimate that as many as 60 TV production companies in the UK may be forced to shut down, no longer supported by Channel 4. What would happen then to Channel 4’s infamous ‘remit’, dedicated to broadcasting alternative perspectives, and showcasing diverse voices and communities?

To tackle this, specific conditions could be written into the sales contract- ensuring that Channel 4 must delegate a portion of its budget to independent producers, or produce a certain number of programmes outside of London. As former Culture Secretary Jeremy Hunt told Sky News: “As it stands, Channel Four provides competition to the BBC on what’s called public service broadcasting – the kinds of programmes that are not commercially viable – and I think it’d be a shame to lose that.”