Who could buy the broadcaster

Could the media mogul launch a bid for Channel 4? Given his recent foray back into British television through the Piers Morgan-led TV news network TalkTV, there will be speculation that Mr Murdoch will cast an eye over the broadcaster as well. He was previously linked to a bid to buy Channel 5 in 2014 when it was owned by the former adult magazine tycoon Richard Desmond. Channel 5 was ultimately sold to Paramount.

Q&A: Why does the Government want to privatize Channel 4?

Fears that Channel 4 could be outgunned by the huge spending power of the American streaming giants have pushed the Culture Secretary, Nadine Dorries, towards privatization.

Ministers believe that under the control of “deep pocketed” owner Channel 4 would be able to thrive as a public service broadcaster because it would have the financial flexibility to invest into original programming that could help compete with the likes of Netflix and Disney.

Channel 4 is owned by the Government, but does not take any taxpayer money from the £159 a year license fee that funds the BBC. Instead, it is a not-for-profit company that uses all the money it makes from advertising to fund program commissions and the costs of the wider business.

While Channel 4 enjoyed record financial results in the wake of the pandemic, ministers were concerned about the blow it took at the height of the Covid crisis when its advertising revenues plunged and it was forced to cut back its budget and save £95m.

Some MPs believe Channel 4 would be more resilient to future downturns in the advertising industry if a wealthy backer was able to shield it from such fluctuations.

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What does privatizing Channel 4 mean?

More details on how a sale would happen are set to be laid out in a White Paper later this month, but for now, the crux is that the Government is looking to end its ownership of Channel 4. Bids are expected next year, with the aim of selling the broadcaster in early 2024.

The cash made from the sale is expected to become a “creative dividend”, to be funneled back into the TV industry and production companies. It is unclear how large this would be, although some have suggested it could raise more than £1bn.

Although Channel 4 would have a new owner, government sources told The Telegraph that the plan was to keep Channel 4 as a “public service broadcaster”. Exactly how much of its remit the government would seek to protect as part of a sale could have a strong bearing on the sale price.

Channel 4 is expected to make edgy content for a younger audience, to commission shows from Britain’s burgeoning independent production sector and ensure a slice of its programming comes from outside London. It has also recently opened a regional headquarters in Leeds where Channel 4 News is now broadcast from on some days. Enders Analysis says Channel 4’s value could swing anywhere between £600m and £1.5bn depending on how much of its remit is enshrined as part of any sell-off.

Why does the Government want to do it?

Nadine Dorries has said government ownership was “holding Channel 4 back from competing against streaming giants like Netflix and Amazon.”

Ministers said this ownership structure had acted as a “straight jacket” on the broadcaster. A government source said a sale “could allow it to set up its own production house and generate its own intellectual property.”

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Meanwhile, critics of privatization have argued that the sale has been prompted by Tory dislike for Channel 4’s “woke” left-wing coverage and had opted for a sale as punishment beating for its provocative moves, such as replacing Boris Johnson with a melting ice sculpture when he failed to turn up for a climate change debate ahead of the 2019 election.

Does everyone agree?

There are concerns about what this means for Channel 4’s future. The company itself said it was “disappointing that [the] announcement has been made without formally recognizing the significant public interest concerns which have been raised”.

The chief executive, Alex Mahon, has argued key parts of Channel 4’s DNA could be sacrificed by a new owner that would be motivated more by their pursuit of profits than protecting the company’s position as a public service broadcaster.

Pact, the industry body representing the UK’s film and TV production sector, has branded the move unnecessary, claiming it puts at risk the UK’s welter of independent producers.

A spokesman for Pact said: “Unlike other broadcasters, Channel 4 makes none of its programs in-house, commissioning hundreds of independent TV companies from around the UK each year to make its programmes, and a private owner could shift production away from these independent producers to cut costs, with a knock-on impact on the wider industry.

“It is estimated that this shift to in-house production will lead to a loss of £3.7bn to the sector over a decade. This potential move to in-house production transfers value away from British SMEs and into the hands of large profit driven corporations.”

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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