Channel 4 proposal to sell London HQ and focus on the North

In 4: The Next Episode, the broadcaster outlines how it can remain publicly funded, while at the same time increasing its scale and sustainability for the long term, with more digital and global content, and increased support for SMEs.

Key proposals include leveraging significant new private capital for the first time to bring £1bn of British investment in content by 2030. This it said, would strengthen its commercially funded, free-to-air model and “contribution to British life.” The organisation has already been in talks to form a joint venture with an external investor as a majority shareholder.

It stated that, should it remain in public ownership, it would ensure that additional revenues were focused on maximising public purpose over profit.

Channel 4 is also proposing Global All4 to create British IP to export around the world – the promotion of “British” content and voices is another key government requirement of broadcasters.

The paper concludes that when taking into account the overall economic contribution of Channel 4, retaining Channel 4 in public ownership and implementing the 4: The Next Episode proposals would lead to growth in the creative economy and jobs across the UK.

However, it said that both supply chain GVA and jobs are estimated to fall overall under privatisation, particularly in the Nations & Regions.

It also points to independent research from Ampere, which said that should Channel 4 be sold and its publisher-broadcaster status be removed – currently Channel 4 doesn’t make any productions in-house – over 60 production companies would be “at serious risk.”

The paper ends:

“The government therefore faces a trade-off between a one-time revenue injection of c.£0.5bn from privatisation; and a series of significant risks associated with privatisation:

• Risks to the UK creative economy
• The loss of £3bn GVA from UK supply chains, and potentially a reduction in GVA in the UK economy entirely if a new owner offshores profits
• A 32% decline in jobs supported in Channel 4’s supply chain
• Risks to the government’s levelling-up agenda
• A particular adverse impact on the Nations & Regions – with c. £1bn to £2bn GVA foregone, and a c. 40% decline in Nations & Regions jobs supported
• Loss of 100,000 training opportunities over the next ten years, with this training intended to offer a route into the industry for young people who would otherwise not have the opportunity
• Risks to British intellectual property
• Removal of publisher-broadcaster status would create downside risk for the UK’s world-leading production sector, raising the risk of more offshoring of British IP
• Independent analysis by Ampere finds that over 60 production companies would be put at serious risk
• Broader implementation risks
• Significant implementation and legislative costs of change
• Uncertainty and disruption in Channel 4’s business during legislative and sale process.”

However, it believes by retaining Channel 4 in public ownership and implementing Channel 4’s 4: The Next Episode proposals, it would:

• Deliver an enhanced economic contribution over and above Channel 4’s current model: resulting in over £11bn of GVA overall; and supporting over 13,000 jobs
• Allow the government to continue to own a valuable asset, which would likely increase in value as a result of the growth and diversification plans outlined by Channel 4
• Avoid the implementation and legislative costs of change noted above: Channel 4’s plans can be implemented rapidly, and without the need for legislation or a potentially lengthy sale process.

In April, the Department for Digital, Culture, Media & Sport said that the reason for privatising Channel 4 was to enable it to borrow money, raise private sector capital and issue shares, rather than being “heavily reliant on cyclical advertising revenues, which are moving to digital platforms.”

“Viewer choice is no longer a problem in the world of smart TVs and streaming sticks, catch-up and on-demand. This rapidly changing media landscape means Channel 4 is facing unprecedented competition for viewers, programmes and talent from global giants with deep pockets. Netflix spent £779 million on UK original productions in 2020 – more than twice as much as Channel 4,” it stated.