Culture secretary Michelle Donelan has written to the prime minister recommending Channel 4 is kept under public ownership, stating privatisation is “not the right decision” for the future of the broadcaster.
The Secretary of State for the Department of Digital, Culture, Media and Sport (DCMS) has written to Rishi Sunak to recommend reforms to support Channel 4’s “long-term sustainability”, after concluding a sale of the broadcaster would not be the right decision.
The two previous holders of Donelan’s role – Oliver Dowden and Nadine Dorries – had maintained privatisation was in the broadcaster’s best interest. In April last year, Dorries tweeted that public ownership was “holding Channel 4 back from competing against streaming giants like Netflix and Amazon”.
However, after being appointed by former prime minister Liz Truss in September, Donelan confirmed she would “re-examine the business case” for privatisation.
“After reviewing the business case, I have concluded that pursuing a sale at this point is not the right decision, and there are better ways to secure [Channel 4’s] sustainability and that of the UK independent production sector,” she wrote in a letter to Sunak, shared on Twitter by Global’s analysis and investigations editor Lewis Goodall.
The culture secretary’s review of the business case has clearly concluded that no convincing arguments for privatisation exist.
Phil Smith, ISBA
Elsewhere in the letter, Donelan suggests giving Channel 4 more commercial flexibility, writing: “[Channel 4] is commercially funded and the majority of its funding comes from linear TV advertising, which is in long-term decline.”
The minister suggests relaxing publisher-broadcaster restrictions to enable Channel 4 to make more content and “diversify revenue”. She also outlines plans to double the number of roles the broadcaster employs beyond London by 2025 – from 300 to 600 – and to double investment in skills to £10m.
In a statement to The Guardian, the DCMS would not be drawn on whether the letter equated to a definite shelving of the privatisation plans.
“We do not comment on speculation. The DCMS secretary of state has been clear that we are looking again at the business case for the sale of Channel 4. We will announce more on our plans in due course,” a spokesperson said.
According to ISBA director general, Phil Smith, if the government does take Donelan’s recommendation not to go through with the privatisation of Channel 4 “advertisers will be delighted”.
“The culture secretary’s review of the business case has clearly concluded that no convincing arguments for privatisation exist. ISBA has long maintained that the sustainability of Channel 4 could be ensured by changes to its business model, rather than ownership,” he adds.
Smith believes a decision to cancel the planned sale would bring “certainty for those planning advertising campaigns, supports the UK’s creative industries and backs future investment in all regions and nations.”
Donelan’s letter to the prime minister makes the case that the UK’s independent production sector, worth an estimated £3bn, “would be very disrupted by a sale at a time when growth and economic stability are our priorities”.
IPA director general Paul Bainsfair welcomes this assessment.
“It is also worth highlighting that this symbiotic relationship of public service broadcaster (PSB) and independent production ecosystem is underpinned by advertising,” he says.
“Channel 4 is a hugely successful advertising business delivering a large, unique audience profile through its PSB remit.”
He adds the broadcaster is “well positioned for continued success”, with a strong leadership team, innovation as a priority and a “market leading” broadcast video-on-demand (BVOD) service.
Channel 4’s distinctive appeal for advertisers
In April 2022, when the Boris Johnson government first announced plans to privatise Channel 4, many advertisers expressed concern the broadcaster would lose what sets it apart if a sale were to go ahead.
Boots CMO Pete Markey told Marketing Week he hoped Channel 4 would be able to maintain its “distinctive approach” post-sale.
“My hope is that at all costs we maintain the quality of leadership and content that has always made Channel 4 an outstanding broadcaster and brand partner,” he said.
Mochi ice cream brand Little Moons made its TV debut on Channel 4. Marketing director Ross Farquhar described any decision to sell the broadcaster as “worrying” for brands like Little Moons.
He stated Little Moons “shares a great deal in common” with Channel 4’s ‘Altogether Different’ ethos, which is why the brand wanted to make its TV debut with the broadcaster.
“Their audience is our audience and they’re drawn to the channel for its distinctiveness in a media landscape that can sometimes feel like it has prioritised quantity over quality, and populism over craft,” Farquhar added.
The concept of privatisation troubled Ben Rhodes, brand director at Phoenix Group – the UK’s largest long-term savings and retirement business – regarding the needs of older consumers.
“Channel 4 offers a vital contribution to public service broadcasting in the UK. This is particularly the case for viewers over the age of 60, who are 13% more likely to watch Channel 4 than the rest of the population,” he told Marketing Week back in April.
Responding to today’s development, ISBA’s Smith notes one of the key reasons advertisers have been “overwhelmingly opposed” to the idea of privatisation is because they value “Channel 4’s diverse audience.”