Media and advertising leaders are disappointed at government plans to press ahead with the privatisation of Channel 4 and fear it could have widespread repercussions for the media ecosystem.
On Monday, the government confirmed it plans to go ahead with the sale of Channel 4, which has a unique business model of being publicly owned and privately funded, mostly through advertising.
The culture secretary Nadine Dorries has decided to recommend selling the broadcaster, despite fierce opposition from many in the media and advertising industry.
A DCMS spokesperson said a change of ownership could “give the corporation new freedoms to innovate and grow while continuing to make an important economic, social and cultural contribution to the UK”.
The decision to sell Channel 4 is likely to be hotly debated in parliament and could meet strong opposition in the House of Lords, which it must pass before any potential sale.
The shadow culture secretary Lucy Powell described the plans as an act of “cultural vandalism” that “could cost jobs and opportunities in the North and Yorkshire, and hit the wider British creative economy".
Dorries' decision comes in the wake of a public consultation that received 60,000 responses, many of which warned against a sale.
This week, leaders within the advertising industry have also expressed concerns about the sale to ±±¾©Èü³µpk10.
Paul Bainsfair, director general of the Institute of Practitioners in Advertising (IPA), said Channel 4 has a strong record of “interesting and challenging programming that enriches the UK broadcast scene”.
“To my mind the price the government would get from the sale would not justify the loss of this uniquely British institution,” he added.
In a broader statement, the IPA said it saw no benefits to a sale: “This move will result in the loss of the significant benefits that Channel 4 offers, including its unique access to audiences; its innovative approach which drives the marketplace; and its commitment to diversity and inclusion that delivers for British business. Instead, we now face the risks privatisation could bring regarding competition and media plurality.
“Its purpose-driven programming is good for society and it’s good for culture, and crucially, to the IPA, our members and their advertiser clients, it’s good for business. We see no upside but significant downside to privatisation.”
ISBA, the industry body that represents advertisers, said it was “very disappointed” by the government’s plans.
Director general Phil Smith warned that outside public ownership, there was a “substantial risk” that Channel 4’s public service broadcasting remit would be “diluted and challenged over time by a new private owner – one that naturally would be pursuing profit and returns to shareholders as a priority”.
The impact of this would be felt in programming that caters to the younger, underrepresented audiences, which Channel 4 reaches.
“No new owner, with a purely commercial incentive, could be guaranteed to maintain all the facets of Channel 4’s current offering – including its investment outside of London, with a new headquarters in Leeds and support for the UK's independent production sector,” Smith added.
TV market concentration
Another concern for advertisers is the potential for the TV advertising market to become even more concentrated. There are currently three UK-based TV advertising sales houses: owned by Channel 4, ITV and Sky. If Channel 4 were acquired by ITV, as has been mooted in the past, this would create a situation where more than 70% of ad sales went though one sales operation.
“Were these to be consolidated, it would create undue dominance in the TV advertising market and reduce competition,” Smith pointed out. “For the market to be effective for both advertisers and consumers, there needs to be competition.”
This is a concern shared by PwC partner and media leader Sam Tomlinson, who said the industry’s concerns had been ignored rather than rebutted by the government.
“Assuming the process goes ahead, there will be a difficult trade-off between relaxing the Channel 4 remit, which would be damaging to both the UK's independent TV producers and its under-served audiences, and maintaining the remit, which will reduce the value of C4 in privatisation,” Tomlinson said.
Media buyers are also worried about the repercussions of any sale. Steve Bignell, chief executive of Publicis Media Exchange, said it is too early to know what a sale would mean for Channel 4’s remit as a “disruptive and innovative force in UK broadcasting that is committed to independent production”.
He said the broadcaster’s unique role has allowed it to produce “rich and diverse programming that, in some cases, others wouldn’t touch” which is important on “both a societal level but also enables advertisers to reach more underrepresented audiences”.
He added: “Would a commercially-led acquisition continue to offer this? The asking price (reported at around £1bn) seems quite high and could scare off potential buyers unless there is a change to the remit. Whoever the eventual buyer of Channel 4 is, the ramifications on the UK broadcast trading ecosystem could be widespread.”
'C4 is not designed to take on Netfilx'
In rationalising the sale of Channel 4, the government insists that private money could allow the broadcaster to compete with global streaming giants such as Netflix, Disney+ and Amazon Prime TV.
However, when Channel 4 was set up by Margaret Thatcher 40 years ago, clearly, this was not the model upon which it was based: key components of its charter were to ensure it produced a proportion of programming for younger audiences and less-represented communities that could not be found elsewhere.
Channel 4’s model as a publisher broadcaster means it also plays a valuable role in commissioning independent production houses to create its programming, providing much-needed investment in the UK film and creative industries.
Havas Media Group’s chief investment officer, Simon Bevan, told ±±¾©Èü³µpk10 he is concerned that if Channel 4 falls into private hands, it will no longer take the sort of programming risks that spawned Big Brother, Skins and It’s a Sin.
“Everyone is disappointed [with this decision]. Channel 4 was not set up to compete with Netflix, its remit means its programming is focused on diversity and under-reprented communities. It allows it to take risks that other broadcasters wont,” he said.
“Its raison d'être is to drive lighter viewers, and for advertisers it provides an alternative. It is a for-profit business, there is a question over the diversity of programming. We are also worried about the support that C4 has given the independent production community, and driving creativity in the media. Is a private company going to deliver that?”
Bevan also pointed to Channel 4’s innovative approach to its BVOD platform All 4 and whether a private backer would invest as heavily in Channel 4’s strategy to become more digital-first.
“After all the effort of the industry in responding to the consultation, it all feels a bit underwhelming that the government would come back to that decision. There are concerns about how this will impact the independent production and creative industries in the UK,” he said.