The government has announced plans to privatise Channel 4, which currently consists of 12 channels including C4, E4, Film4, and streaming service, All 4.
Channel Four Television Corporation was set up by an Act of Parliament. It is a publicly owned not-for-profit corporation and does not have any shareholders. The broadcaster’s board is appointed by Ofcom, in agreement with the Secretary of State for Digital, Culture, Media and Sport.
As a publisher-broadcaster, and contrary to popular belief, Channel 4 does not actually produce its own programmes but commissions them from more than 300 independent production companies across the UK every year.
Why privatisation?
In a changing media landscape, the government say that “TV advertising revenues are declining, and programme budgets are rising” (BBC), therefore C4 is being held back from contending with streaming giants such as Netflix, Amazon, and Disney+. Ministers want to sell C4 to a private company to compete with these services.
According to the BBC, following a public consultation on the future of C4, Culture Secretary Nadine Dorries released a statement on the decision to privatise the channel:
“Channel 4 rightly holds a cherished place in British life and I want that to remain the case. I have come to the conclusion that government ownership is holding Channel 4 back from competing against streaming giants like Netflix and Amazon. A change of ownership will give Channel 4 the tools and freedom to flourish and thrive as a public service broadcaster long into the future.”
Streaming giants to launch ad-funded model
Netflix and Disney+ are set to launch ad-funded options to reduce the cost of subscription in a battle to turn around the recent decline in growth. Amazon Prime are also currently recruiting heavily for their Streaming Advertising team, which is an indication of things to come.
What could the impact be?
The independent producers who create programming for the channel can profit when content is sold to streaming services or broadcasters around the world, as BBC and ITV studios do currently. A privatised channel could make more money from those rights – and make more programmes.
According to the government:
“A new owner could bring access and benefits, including access to capital, strategic partnerships, and to the international markets. Private investment would mean more content and more jobs.”
However, as C4 is funded by its own commercial activities (with the majority of this coming from advertisers) it has been able to commission all valued public service programming from independent producers.
The channels’ content investments have funded some of the UK’s most iconic and often bold programming, including Big Brother, Skins and It’s a Sin.
The broadcasting industry has already expressed concern that some of C4’s less commercial outputs, including drama, news, and current affairs, could suffer due to privatisation. Critics argue that the quality of Channel 4’s programmes would be lost from a sell-off.
Could a private owner provide the same diverse programming whilst maintaining its economic and cultural contribution to the UK?
And what about advertisers?
The fear that C4’s current ‘bold and brave’ scheduling may be cut could result in the channels’ impacts and TVRs being affected. When competing with streaming giants, not only is there a risk that C4 will lose its identity, but it may begin to overlook audiences who tune in to watch C4’s valued public service broadcasting.
All Response Media viewpoints
“One concern for advertisers would be if ITV or Sky were to buy the channel, it would exacerbate the growing disconnect between SOCI (Share of Commercial Impacts) and the more data-driven methods we use to assess TV effectiveness. Whilst buying Channel 4 might give ITV or Sky more “share”, it should not be the pre-determining factor for trading discussions, which is all too often where the broadcasters want to head.”
Aldona Cornish
Director of Trading
“If Google or Facebook were to get their hands on C4 it could be incredibly interesting. With broadcasters increasingly looking to move all broadcast to streaming within the next 5 years, a partnership with one of the big boys of digital media could jolt the entire market.
Sky Glass is a first step towards fully streamed TV (live and on demand) which is likely to be rolled out to enable them to sell programmatically rather than in the traditional way.
C4 is behind the curve on this but could quickly catch up with the backing of Google or Facebook. This could fast track the evolution away from linear into a fully streamed TV market, and also open up Google or Facebook TVs, much in the way that Chromebooks have begun to eat into the laptop market.”
Ed Feast
Director of Planning
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