Channel 4's new freedoms after privatisation plans scrapped

Channel 4's new freedoms after privatisation plans scrapped

Wednesday, 1st February 2023
It’s a Sin (Credit: Channel 4)
It’s a Sin (Credit: Channel 4)
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Now that privatisation plans have been ditched, how will Channel 4 take advantage of its new opportunities? Steve Clarke reports.

When, at the beginning of November last year, Channel 4 celebrated its 40th anniversary with a lavish party, complete with a sit-down dinner, at London’s Victoria & Albert Museum, many of those attending wondered if they were witnessing the end of an era.

For decades, the idea of privatising what many considered to be one of the jewels of British broadcasting had been considered by politicians. But successive leadership teams from Michael Grade’s to David Abraham’s had, in the end, always persuaded policymakers that a commercial Channel 4 would jeopardise its programmes and ruin its unique contribution to the UK creative economy. It would undermine the future of those small to medium-sized independent producers whose lifeblood flows from Channel 4’s unusual publisher-broadcaster model.

This time, the Government’s determination to privatise Channel 4 felt different, propelled as it was by Boris Johnson and his arch loyalist Nadine ­Dorries. Yet, despite a new Prime Minister in Rishi Sunak, and Michelle Donelan replacing Dorries as culture secretary, it seemed the die was cast to upend the broadcaster’s business model and transform it into a private operator, possibly owned by Paramount, ITV or Discovery Time Warner.

Spool forward two months. On 5 January, Donelan confirmed the rumours that had been circulating for several weeks – Channel 4 would remain in public ownership, albeit with a few modest reforms.

The culture secretary declared that “Channel 4 is a British success story and a linchpin of our booming creative industries” and, therefore, should not be sold. Instead, there would be a series of tweaks to its operating model, including the ability to make more of its own content (something for which the broadcaster had not asked), to increase its borrowing limit and to move still more of its activities outside London. Another U-turn from an administration that seemed to specialise in them: just months earlier, the message from Whitehall had been that only a privatised Channel 4 could compete effectively against the US streaming giants.

‘The idea of privatising will always come back – even if it doesn’t make any sense’

Significantly, Channel 4 would be allowed to remain in its Richard Rogers-designed Horseferry Road HQ in London, a building that perhaps encapsulates Channel 4’s unique ethos to provide an alternative to the BBC, ITV and Channel 5. And which, to certain people, including former culture secretary John Whittingdale, a consistent advocate of privatisation, reflects what they regard as Channel 4’s leftward­leaning, metropolitan elitism.

“One reason Channel 4 wasn’t privatised was the loyalty of the independent sector. Some indies were pretty half-hearted about their support but, by and large, they stuck by Channel 4,” observes Stewart Purvis, the former ITN CEO who served on the broadcaster’s board between 2013 and 2021.

In return for maintaining the status quo, Channel 4 has promised to invest an extra £5m in skills training and increase regional spending at its bases in Leeds, Bristol and Glasgow. The broadcaster said it will also double the number of staff based outside London, to 600. In other words, about half its staff will eventually be housed outside the capital.

However, by far the most significant of what most observers regard as “modest reforms” to Channel 4’s modus operandi will enable the operator to produce more of its programmes and allow it to borrow more money – in theory, opening the door for Channel 4 to take stakes in independent producers.

“It has got something it never asked for and this will have to be handled with extreme care on the business front,” says Purvis. “The independent production sector is still so much the cause of Channel 4’s success. It won’t want to jeopardise that.”

Pact has already raised serious concerns about the principle of Channel 4 setting up in-house production, but there seems little doubt that a deal will eventually be negotiated. “It will take a while for Pact and Channel 4 to reach an agreement, but all these things can be worked out,” predicts Tom Harrington, head of television at Enders Analysis.

Channel 4 CEO Alex Mahon (Credit: Channel 4)

Channel 4’s CEO, Alex Mahon, is widely regarded as a pragmatist, who, from the start of the Johnson Government’s drive to privatise the broadcaster – seen by many as politically motivated – played her cards very cleverly. Her 17 years of experience in the television business at Fremantle, Talkback Thames and Shine TV, working alongside Elisabeth Murdoch, had left her well equipped to fight Channel 4’s corner.

“Some of her predecessors have said, ‘Privatisation – over my dead body’,” notes a senior broadcaster. “Alex was much smarter than that. You never quite knew what she was thinking. We also should not forget the role of Deputy Chair and Acting Chair Dawn Airey, whose negotiations with civil servants at DCMS were critical.”

Airey is, of course, a former Channel 4 executive, who worked under Michael Grade. Like Mahon, she knows television inside out.

Tory MP and father of the house Peter Bottomley – who opposed privatisation– told Donelan he hoped Channel 4 would not be “forced” to make too many of its own programmes, as this would be to the detriment of the indie sector.

Donelan has said she plans to raise Channel 4’s production quota from qualifying indies, currently 25%, in order to protect indies, and to introduce safeguards for smaller indies. “The package of measures announced is about giving Channel 4 the tools to be viable in the long term. Of course, it is up to Channel 4 what it does with those tools – nobody is forcing it to do anything,” she explained.

“It helps [Channel 4] to have a little bit more control over its content,” notes Harrington. “It has been very proactive online. In the past, [the only rights] it worried about were the traditional broadcast and the repeat, so it didn’t really matter where [a show] ended up. Now, the expectation is that It’s a Sin is going to be on All 4 for ever.”

Strictly speaking, the “purity” of the publisher-broadcaster model has evolved, with short online content having been produced in Leeds for some time; 4Studio was set up there in 2020 to produce content for social media platforms.

One consequence of not privatising Channel 4 is that the Government can now get on with its Media Bill without the distraction of privatising Channel 4. “Even those of us who could see there were reasons for privatising Channel 4 regarded it as a massive distraction because of the delays surrounding the Media Bill,” notes one broadcasting executive.

So, is the notion of privatising Channel 4 finally dead and buried? It seems not. “Depending on who is in government, it will come back,” forecasts ­Harrington. He adds: “As a subject, Channel 4 isn’t as divisive as the BBC. Overall, people have very good feelings towards Channel 4 but, if you want to distract attention from something else, the idea of privatising will always come back – even if it doesn’t make any sense.

“Channel 4 doesn’t really cost anything to anyone. It provides all these jobs and all this content, so arguing that it should be sold is always going to be very difficult.”

As for Channel 4’s future, despite the success of All 4, the threat from Netflix et al hasn’t gone away. For many, having four UK public service broadcasters in such a rapidly changing market makes little sense. Don’t be surprised if the argument for consolidating the PSB’s streaming services gains traction in the coming months.

Some also forecast pushback on the decision to allow Channel 4 to remain at Horseferry Road, a building said to be worth at least £100m. “At one point in the debate over privatisation, Channel 4 said it was prepared to move out of London. The economic case for becoming still less London­centric is compelling,” reckons a senior broadcaster. And Purvis says: “I think it ought to look at premises in a fresh light. That would be the right thing to do.”

Regarding Mahon’s career, rule nothing out. However long she stays at Channel 4 her legacy is secure. Several observers predict that Deborah Turness, CEO of BBC news and current affairs, has a credible rival to succeed Tim Davie and become the BBC’s first female Director-General.