Let’s try to take the government’s case for privatising Channel 4 at face value. It runs something like this: far from being motivated by revenge for critical coverage, ministers are aiming to ensure the channel thrives in the long-term.
According to this line of thinking, Channel 4, despite its healthy-looking record surplus of £74m in 2020, is in danger of being crushed by Netflix, Amazon Prime et al in the new era of subscription and streaming. It relies on advertising income and, under its current remit, can’t produce programmes in-house. Look forward a decade and the sums spent with independent UK producers could dwindle. What worked in the past doesn’t guarantee success in the future.
There are probably two key government texts that have sketched out this thesis, and neither came from Nadine Dorries, the culture secretary who was shockingly uninformed about Channel 4’s financing when appearing before MPs last year. One was a speech by John Whittingdale, as media minister, last September when he said that, at some point, Channel 4 would need cash to grow and that only the private sector could be expected to provide. He offered a vision of the best of both worlds: a remit that protects independent news and regional production but adds deeper pockets.
A spin on a similar theme was offered by Andrew Griffith, the former Sky finance director who is now head of the No 10 policy unit, in a column in the Daily Telegraph last year. He said Channel 4’s “next, and most enduring, contribution to the UK media landscape may be to keep some of its distinctive remit but as part of adding useful scale to another UK-based operator”.
These analyses also tend to contain a strong strain of regret that the UK doesn’t have a streaming operation capable of giving the Americans a run for their money. Both Whittingdale and Griffith were damning about how the Competition and Market Authority in 2009 killed a proposed streaming collaboration between the BBC, ITV and Channel 4. “The UK’s competition regulator took the ball away before we could even get on the pitch,” wrote Griffith.
At this point, however, the grand theorising meets the hard reality of who the government expects to buy Channel 4. Most of the names on outsiders’ list of candidates are American. Given the patriotic preamble, it would be perverse to serve up Channel 4 on a platter to a US giant such as Discovery and Paramount, owner of Channel 5. Even Sky is owned by Comcast of the US these days.
ITV could play the role of “national champion” and would probably be able to achieve a few budget-enhancing savings. But ITV faces its own challenges in adapting to the age of streaming and one suspects any interest on its part would primarily flow from the defensive instinct to avoid fresh competitive headaches. Channel 4 might be left as an unloved add-on, which wouldn’t help anybody.
Alternatively, ministers may imagine that UK venture capital will rush to fly the flag for British television. Well, possibly, but such bidders, like all private-sector parties, would want an answer to the second question overhanging the privatisation process: what public service obligations would still attach to Channel 4? Until a media bill, covering wider public service broadcasting requirements, appears, there is no clarity. In its absence, Whittingdale’s hopeful talk about “the false binary choice between public service content and privatisation” doesn’t count for anything. Prospective buyers of Channel 4 will see a clear tension: freedom to set budgets can make a real difference to profits.
Meanwhile, government muttering about a “creative dividend” from a sale, meaning redirecting proceeds towards boosting regional production-making, sounds extremely vague. In its current incarnation, Channel 4 is surely fulfilling the role better than any minister could hope to do. As more than a few Tories have noted, the channel still meets the original Thatcherite vision of unleashing entrepreneurial instincts among independent production houses. And 55% of spend on new content last year was commissioned from companies outside London, which deserves a tick in the levelling up box.
Therein lies the real oddity of the privatisation plan. Flogging Channel 4 will not bring about the longed-for British reply to Netflix. It’s not big enough and it’s too late to mourn decisions taken by shortsighted competition regulators in 2009. The risk in privatisation is that Channel 4’s clear and obvious current benefits – diversity in programming and regional spending – get lost without a corresponding gain. Tory rebels should keep pushing. A compelling business case for a sale simply hasn’t been made.
