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Channel 4 Warns of ‘Fundamental Impact’ on Organization’s Culture if Privatized, Sets Out Plans for Additional $70 Million Investment

Naman Ramachandran
·2-min read

U.K. public service broadcaster Channel 4 has warned that its public service remit would be compromised in favor of profits if privatized.

In response to a U.K. government Department for Digital, Culture, Media and Sport (DCMS) consultation on the proposed privatization, the broadcaster said: “Moving Channel 4 into private ownership will have an inevitable and fundamental impact on the incentives and culture of the organization. Under public ownership, the remit permeates Channel 4’s full range of programming – far beyond the specific quotas required by its licence.”

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“Under private ownership, Channel 4’s fiduciary duty would be to maximise returns to shareholders. This dynamic can be seen in other commercially funded, but privately-owned PSBs like ITV. For instance, ITV’s most recent results show an EBITA [Earnings before interest, taxes, and amortization] margin of c.20%. A privately owned Channel 4 would be expected to replicate similar margins, and this would be most likely achieved through a cut to our biggest outgoing cost, our content budget,” the response added.

“Given this, a private owner would have a natural and legitimate incentive to seek both to dilute the more commercially onerous parts of the channel’s remit and to scale back those additional public benefits, whether that is covering public service themes in our mainstream programs or our training and skills initiatives, which are not mandated by the statutory remit,” the response continued.

Going forward, Channel 4, given its reach amongst the U.K. youth population, has set out a plan to invest an additional £50 million ($69.5 million) in content for younger viewers, focused on streamed and social content. Channel 4 also plans to expand as a publisher-broadcaster internationally, helping indies creating new formats with global potential and launching an advertiser-funded international streaming service.

The broadcaster also said it would accelerate its role as a public service catalyst across the U.K., with £5 million of investment to reach 15,000 young people annually with training and development initiatives from 2022.

Following the Channel 4 response to the consultation, a DCMS spokesperson said: “We want Channel 4 to have a successful and sustainable future. Its public service broadcaster remit, its ability to make distinctive content and its work with independent producers are precisely the strengths we would protect and expect any potential buyer to develop through new investment, should we decide to proceed with a sale.”

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