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£228m content spend outside London as Channel 4 publishes annual report

Channel 4 CEO Alex Mahon

Channel 4 spent a record £228m on content from production companies outside of London in 2022, with two-thirds of originated show hours coming from the Nations and Regions, according to today’s annual report.

The broadcaster achieved total revenues of £1.14bn in 2022, under two per cent below 2021’s record £1.16bn, despite the “significantly more challenging consumer environment.”

Channel 4 reports that it has made significant strides in its Future4 strategy as t focused on diversification of its revenue base. In 2022 digital advertising brought in £255m, accounting for 22per cent of revenues, a 14 per cent increase over 2021, and staying on track to reach Channel 4’s Future4 target of 30 per cent of revenues coming from digital advertising by 2025.

By the close of 2022m one-third of Channel 4’s total revenues no longer came from linear advertising. Non-advertising revenues, including film and partnerships revenue, reached £121m, 11 per cent of Channel 4’s total revenues in 2022 and three years ahead of its 10 per cent target.

Channel 4 recorded a pre-tax surplus of £20 million before exceptional items, including the one-off retention payment of £17 million linked to privatisation. This is the third year in a row the broadcaster has recorded a surplus, with Channel 4 increasing its net cash reserves to £253 million and group net assets to £560 million. Channel 4 also successfully renewed its ESG-linked £75 million revolving credit facility for another five years.

The broadcaster spent an all-time record of £713m on content over the year, including £570 million on originated content, working with 170 independent production companies and achieving the record spend outside London.

Over the course of 2022, Channel 4 achieved 91 programme awards – the highest level since 2014
– including Channel of the Year at Edinburgh and earlier this year picked up 13 TV and Craft
BAFTAs, the broadcaster’s best performance in 22 years.

Film4 enjoyed a successful year too, with four-time BAFTA-winning The Banshees of Inisherin and acclaimed films such as Living, Brian and Charles, and The Son. This year, Film4 has already won two major prizes at Cannes with Molly Manning Walker’s debut How to Have Sex and Jonathan Glazer’s The Zone of Interest winning the Grand Prix.

In 2022 Channel 4 achieved 1.4 billion total streaming views, just shy of its record 1.5 billion views achieved during lockdown in 2021. For context, 2021 had the advantage of increased home viewership due to people being required to stay at home in the first half of the year. In the second half of 2022, streaming views were five per cent higher than the same period in 2021.

Channel 4 continued to be the youngest profiling Broadcaster Video on Demand (BVOD) service in the UK, with 16-34-year-olds making up one-third of its user base. To date, 85 per cent of the UK’s 16-34-year-olds have a Channel 4 streaming account.

Since its launch in October 2022, Channel 4.0, a new digital brand aimed at young people, has generated more than 42 million views, with 75 per cent from 13-24-year-olds. UNTOLD, Channel 4’s digital-first current affairs strand for young people, performed well on both Channel 4 streaming and YouTube.

Channel 4 also continued to grow its footprint as one of the largest social media brands for young people in the UK, with a series of strategic commercial partnerships with digital platforms including YouTube, Snapchat, and TikTok.

The broadcaster entered 2023 with a robust balance sheet, although persistent inflation has seen the TV advertising market experience a downturn, which Channel 4 forecasts will be down around six per cent for the year.

Despite this, Channel 4’s digital revenues are expected to grow by double digits to represent 25 per cent of revenues in 2023, while BVOD is forecast to grow above most media in 2023 at circa 12 per cent. Cash investment in content remains on track to increase in 2023 over 2022, though playout of this will be phased across this year and 2024.

Channel 4 expects the ad market to improve into Q4 of this year, with the broadcaster forecasting full year revenues above £1 billion.

Alex Mahon, CEO of Channel 4, said: “With Channel 4’s financial sustainability and ownership status no longer in question, we are doubling down on what we were created for: to deliver the best and broadest range of programmes that truly reflect British lives; to engage young people with genuinely public service content; and to prioritise digital growth to be where the audience is.

“As the industry sees through this cyclical advertising downturn, Channel 4 will be at the forefront, creatively more relevant, vibrant and distinctive than ever, especially for young audiences. We will continue to innovate, embrace change and adapt to the challenges of the future.”

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