What you need to know about the privatization of Channel 4 | Channel 4

Who would buy a privatized Channel 4?

The industry player most likely to buy Channel 4, with the fewest regulatory hurdles, is Discovery. The major US pay-TV company, which is merging with WarnerMedia, the parent company of CNN, HBO and the Hollywood studio behind the Batman and Harry Potter franchises, expressed interest when the broadcaster was last privatized in 2016.

The company, which combines free-to-air and pay-TV operations, continues to be very active in the UK market, securing an agreement with BT in February to launch a pay-TV joint venture including BT Sport, which owns the sports rights. including Premier League and Champions League football.

However, ITV has lobbied Whitehall over the possibility of a ‘national champion’ takeover, designed to absorb the political fallout from another takeover of a British ‘crown jewel’ by a foreign owner. The problem for ITV, which said in the 2000s that it would bid for Channel 4 if combined with another broadcaster as has been mooted with Channel 5, is that it would create what amounts to a monopoly television advertising, which would lead to significant competition concerns.

There will also be significant interest from private equity buyers, although Channel 4’s attributions are expected to be changed to allow a non-commercial buyer to profit from the business.

What might happen to a privatized Channel 4?

Channel 4’s mandate has never been to make a profit – the money it earns is plowed back into commissioning and buying programs primarily from UK TV production companies, helping to support a key national industry.

Analysts estimate a privatized Channel 4 would face cuts of 40-50% to its £660million programming budget – spent on content such as news and current affairs, Gogglebox and It’s a Sin – to force its model to become that of a commercial broadcaster. .

It will likely mean cuts to content that doesn’t bring in much revenue from advertising, which Channel 4 relies on for more than 90% of its £1billion annual revenue, such as news.

Channel 4 is a key curator of TV content from UK-based production companies and sees itself as a key part of government ambitions outside London. Analysts estimate that up to 60 TV production companies across the UK could be forced to close if Channel 4 goes into private ownership.

Who owns Channel 4?

Channel 4 was created by Margaret Thatcher’s government in 1982 to provide a culturally stimulating alternative to BBC One, BBC Two and ITV. It is state owned but commercially funded. Unlike the BBC, which is funded by the license fee of £159 a year that its viewers have to pay, Channel 4 receives no financial support from the taxpayer.

What is Channel 4 worth?

While a £1billion price tag was attached to the broadcaster during the last privatization push, it is very difficult to provide a current estimate. Unlike rivals such as ITV and the BBC, Channel 4’s mission means it does not have its own in-house production arm. Although it has the rights to show the programs on linear television and its streaming services in the UK, the broadcaster does not own the rights to market these shows worldwide. Ownership of must-have content and “crown jewels” has been driving the wave of media mergers and takeovers seen in recent years. Any potential buyer would need Channel 4’s model to be allowed to be radically changed to increase margins and business opportunities.

Has privatization ever been attempted?

Privatization in one form or another has been mooted around half a dozen times since Channel 4 launched, with the most serious push coming from David Cameron’s government in 2016. It was spearheaded by the culture secretary of John Whittingdale, who was also overseeing the government’s latest push towards privatization. In the end, it was decided that the benefits of a financial windfall to the government were outweighed by the magnitude of the negative impact on the independent television sector. In 2017, Culture Secretary Karen Bradley formally ruled out privatization, saying Channel 4 was a “valuable public asset” that would “continue to belong to the country”. Instead, the government pushed Channel 4 to move a significant part of its operations and staff out of London. Around 300 of its 800 staff have now moved to a new ‘national’ headquarters in Leeds, as well as ‘creative hubs’ in Bristol and Glasgow.

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