The Government has confirmed its plans to privatise Channel 4.
TV critic and broadcaster Scott Bryan took to social media on Monday, sharing news of the privatisation by posting on Twitter an email from Alex Mahon, CEO of Channel 4.
The email begins: “We have been informed in the last hour that the Government will shortly announce that the Secretary of State has decided to proceed with the proposal to privatise Channel 4."
But what does this mean? Here are answers to some of the key questions about the decision.
Breaking.
— Scott Bryan (@scottygb) April 4, 2022
Channel 4 internal email from Alex Mahon says Government will announce proposal to privatise the broadcaster. pic.twitter.com/DZ335fH9gs
Why does the Government want to privatise the broadcaster?
The Government has been concerned over Channel 4’s long-term future in the streaming era.
A statement by the Department for Digital, Culture, Media & Sport (DCMS) said it had made the decision to allow the channel to “thrive in the face of a rapidly-changing media landscape” while a Government source said the move would “remove Channel 4’s straitjacket”.
Culture Secretary Nadine Dorries added in a tweet that she wanted the broadcaster to remain a “cherished place in British life” but felt that Government ownership was “holding Channel 4 back from competing against streaming giants like Netflix and Amazon”.
She said: “I will seek to reinvest the proceeds of the sale into levelling up the creative sector, putting money into independent production and creative skills in priority parts of the country – delivering a creative dividend for all.”
The Government source told the PA news agency: “C4 is a great business with a strong brand built around it being creative, innovative and distinctive but a change of ownership will remove its straitjacket, giving C4 the freedom to innovate and grow so it can flourish and thrive long into the future and support the whole of the UK creative industries.”
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. 1/3
— Nadine Dorries (@NadineDorries) April 4, 2022
The Government has also argued that a sale could allow the channel, which has limited ability to borrow money or raise private sector capital, to invest in new platforms and products, to establish its own production house and generate its own intellectual property.
What is the current model?
Channel 4 is currently owned by the government and receives its funding from advertising, not the taxpayer.
It was founded in 1982 with an aim to deliver to under-served audiences.
What has happened so far?
Last July, Ministers launched a public consultation into a potential change of ownership of the channel.
Ms Dorres has been working through 60,000 responses to the consultation.
The Government informed the broadcaster of the decision to go ahead with the sale on Monday. This comes after years of clashes between the two sides.
So, what happens now?
The DCMS said further details will be announced “shortly”.
Channel 4 chief executive Alex Mahon said “there will now be a long process ahead”, writing to staff in an internal email on Monday that it could take 18 months or more for the required legislation to pass through the House of Commons and then Lords.
“During that time, we’ll continue to work with DCMS and Government, and with our supporters across the industry to make the arguments to ensure that Channel 4 can continue to deliver its remit,” she said.
Details and plans for the sale will be set out in a White Paper in April, and will be included in a new Media Bill for spring 2023, according to reports.
Bids for the broadcaster are expected to come in next year with a view to complete the sale in early 2024, ahead of the next general election expected at latest in May that year, the Daily Telegraph reported.
How has Channel 4 reacted?
A spokesperson for Channel 4 said it was “disappointed” with the decision but would “continue to engage” with the Government on the process to “ensure that Channel 4 continues to play its unique part in Britain’s creative ecology and national life”.
The channel explained that it presented the Government with an alternative to privatisation that would “safeguard its future financial stability” and allow it to do more for the public, creative industries and the economy.
Proceeds from C4 sale will be invested in left behind areas investing in indies and creative skills desperately needed in our rapidly growing creative industries. We made more films here in last Q 2021 than Hollywood, many more studios opening. Funding creative skills is key.
— Nadine Dorries (@NadineDorries) April 4, 2022
Mahon also said in the internal email to staff that they had proposed a “vision for the next 40 years” which was rooted in “continued public ownership” and “built upon the huge amount of public value this model has delivered to date and the opportunity to deliver so much more in the future”.
However, she added that ultimately the ownership of the channel was for the “Government to propose and Parliament to decide” and that her priority now was to “look after all of you and the wonderful Channel 4 spirit”.
The broadcaster said that it will continue to engage with the Government during the legislative process and plans to do everything it can to “ensure that Channel 4 continues to play its unique part in Britain’s creative ecology and national life”.
What have critics of the move said?
The Thick Of It creator Armando Iannucci tweeted: “They asked for ‘a debate’; 90% of submissions in that debate said it was a bad idea. But still they go ahead. Why do they want to make the UK’s great TV industry worse? Why? It makes no business, economic or even patriotic sense.”
The writer of It’s A Sin, Russell T Davies, has previously said privatising Channel 4 would be a “great crime” that would result in programmes like his hit series not being made.
Tory MP Sir Peter Bottomley saying he opposes the privatisation as he feels it is “bad for the diversity of television, bad for viewers and bad for independent producers”.
Philippa Childs, the head of the broadcasting, entertainment, communications and theatre union, described the action as a “short-sighted sale of an incredible UK asset”.
What have advocates of the move said?
Baron Grade of Yarmouth, who was the channel’s chief executive between 1988 and 1997, has said “the status quo is not an option” and that its current remit is like a “straitjacket” in today’s media landscape.
He told the House of Lords Communications and Digital Committee last October: “Channel 4 needs to do what every other free-to-air advertiser-supported business is doing, which is to own its own IP and to be able to gain scale.
“Everything in the Channel 4 constitution presently is against that and therefore it will, in my view, in a very short time really begin to struggle.”
Who could buy Channel 4?
Regular Ofcom’s “fit and proper” test must be passed, and foreign ownership has not been ruled out.
The Telegraph reported that ITV is understood to be interested, while Discovery has held informal talks and Rupert Murdoch has been linked to a possible takeover. Bids from Sky, Channel 5 owner Paramount, Amazon and Netflix are also possible.
A Government source told the newspaper that ministers “expect a lot of interest in purchasing C4 from a range of serious buyers who want to build on C4’s strengths and help unleash its full potential.”
How much could it be sold for?
No price tag has been set by the Government yet, but reports suggest the channel could be sold for as much as £1 billion.
Ministers have said they will seek to reinvest the proceeds into the creative industries.
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