Grade opens fight to stop C4 sell-off

Michael Grade, head of Channel 4, has almost won the battle to end the cash-draining ITV funding formula, and has now turned his attention towards preventing the privatisation of the company.

There is a large ashtray outside the main doors of Channel 4’s non-smoking building in Victoria. Before you enter the building it is worth looking in the ashtray to see if there is the stub of an outsize cigar there. The large cigar stub acts rather like the Union Jack over Buckingham Palace – it tells you if the ruler is in.

Michael Grade does not disappoint on first meeting. He has red braces, bright red socks and he is single minded about his new political campaign – fighting the proposed privatisation of Channel 4. “It would change the nature of the product,” he maintains. “We believe that the present constitution and the results that you see on the screen are interdependent.”

Grade’s use of the plural personal pronoun is noteworthy. He denies rumours that general manager Frank McGettingan and finance director David Scott are less opposed than he to floating off Channel 4 and cashing in on the usual range of share options and benefits that accrue from a privatisation. “Not only have I the board with me, I have the whole of the executive and the company with me. We believe in what we are doing.”

Grade has spent most of the past two years lobbying to remove the funding formula that required a successful Channel 4 to pay a share of its ad revenue to ITV – it will pay 90m this year. He has almost won that battle, with the channel’s statutory reserve fund returned to programming and the ITV subsidy to be phased out by 1998/9. He now has Heritage Secretary Virginia Bottomley – if somewhat diffidently – arguing his case against privatisation in Cabinet and the channel’s chairman Sir Michael Bishop, a friend of John Major’s, arguing it more discreetly.

Grade’s argument is that unlike other privatisations there is no consumer benefit that would flow from the privatisation of the channel. It would just distort its ability to fulfil its remit and divert programming funds to shareholders.

He dismisses claims that the channel’s opulent new building means there is plenty of fat on the channel that privatisation could trim: “I’d like to see any business in this country that has a fixed overhead as low as 11 per cent of its revenue. By any measure we are the most efficient broadcaster in the UK, there is no question about that.”

Grade is diplomatic about the supporters of privatisation in Government. But he saves his ire for the ITV companies who support the idea or suggest that Channel 4, like them, should be paying a levy to the Treasury. “ITV will stop at nothing to reduce its rent. But the ITV companies volunteered to pay the money, and given their profitability and incredible increase in capital value, there is no case for them reducing their payments whatsoever. They are just trying to unload some of their rent on us. They are exploiting a public asset for shareholder gain.”

Grade’s attacks on ITV over the funding formula were pretty vociferous and he has in the past attacked the values and dominance of Rupert Murdoch. Now, however, with the coming of both digital terrestrial and digital satellite TV, he is looking at alliances to find an outlet for a secondary Channel 4 service.

Channel 4 has told the Independent Television Commission it will rebroadcast Channel 4 and an additional service on digital terrestrial. But he is also preparing a proposal for another secondary service. McGettigan has already mooted the possibility of working with BSkyB’s digital terrestrial service. “We are actively on our way to getting a business plan together for an additional service or services which we are quite excited about, but I can’t say more than that because I haven’t told my board yet.”

Any secondary service will be based on the channel’s present skills as an innovator and is likely to be funded by a combination of advertising, subscriptions or pay-TV.

Grade has been the target of sustained personal abuse because of Channel 4’s output, mainly from the Daily Mail which libelled him as Britain’s pornographer-in-chief. He says he has better things to do than sue and is unaffected because he has no respect for the people making the attacks.

Yet many at the channel wonder if he hasn’t got tired of it all: fighting the Government and the personal abuse. He has been there for eight years and there is the sustained speculation that a Labour government would offer him the post of director-general at the BBC.

“There is nothing more exciting than running this place,” he says, although he admits the time taken on the funding formula and now privatisation stop him practising his reputed skills as a scheduler and talent spotter.

“I would relish the day when I could get the Government out of the business of this channel,” he says. But he doesn’t really mean that.

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