Who will buy Channel 4?
Privatisation of public-service network may attract bids from US streaming giants
Channel 4 could be taken over by a streaming giant such as Netflix under government plans to privatise the free-to-air broadcaster, a government minister has claimed.
Culture Minister John Whittingdale told Times Radio that he did not “by any means rule out” the station being bought by a company such as Netflix or Amazon, adding: “We think that it is sensible to look at alternative ownership models, to make sure that Channel 4 is still able to invest in programme content, to compete with these other services.”
The government will not “rule out anyone” in the bidding process, he continued, adding: “We’ll wait and see what happens.”
Channel 4 has been considered for privatisation by the governments of Margaret Thatcher, John Major and Tony Blair. And in 2016, it was reported that the future of the channel was again being looked into by the government.
As it stands, Channel 4 is publicly owned and commercially funded, so unlike the BBC it gets no financial support from taxpayers. The privatisation of the network would see its ownership transferred from the government to a private company or individual.
Over 90% of the network’s income currently comes from “selling TV advertising in the shows it broadcasts”, The Guardian says, while “the remaining 9% of income comes from operations including 4Studios, which creates digital content for advertisers, and new non-advertising partnership deals”.
It is not profitable, but its “remit has never been to make a profit”, the paper adds. The money it makes is instead “reinvested in commissioning and buying programmes from mostly British TV production companies, helping to support a key national industry”.
The government says that the channel is “vulnerable to unstable advertising markets”, Reuters reports, arguing that “a move into private ownership with a changed remit could help safeguard its future”.
However, a raft of cultural figures have savaged the plans, with Armando Iannucci, the writer of the Alan Partridge character and the political sitcom The Thick of It, tweeting: “Our TV industry is a British success story. Channel 4 profits go back into the industry: selling it off will give them to American shareholders.”
David Attenborough was among a group of public figures to sign a letter this week accusing the government of pursuing “short-sighted political and financial attacks” that risk the UK’s “unique” tradition of public service broadcasting.
Announcing the planned privatisation, Culture Secretary Oliver Dowden said “the time has come to look at how we can unleash the potential of our public service broadcasters”, adding that an alternative ownership model, where Channel 4 retains its public service remit, “may be better for the broadcaster, and better for the country”.
Runners and riders
As Culture Minister Whittingdale told Times Radio, big streaming services are expected to take a look at Channel 4, which is seen as an attractive proposition to outside bidders and was last valued at around £1bn.
Whittingdale told the radio station that “in terms of who might potentially be interested, that’s the purpose of having a government consultation”, adding: “There would be competition issues if a very strongly established broadcaster wanted to merge, and that’s something which automatically is a matter of competition, but I don’t by any means rule out existing streaming services or indeed anybody else.”
In 2016, a report commissioned by Channel 4 identified BT as the “most likely” UK-based company to put in a bid for the channel if it were to be placed on the open market by the government. But “the broadcasting and technology landscape has changed dramatically”, The Guardian says, with BT now “looking for a buyer or strategic partner for its own pay-TV business” as it looks to “focus on full-fibre broadband and 5G mobile rollout”.
The 2016 report also names US group Discovery – which is currently merging with Warner Media – or Channel 5 as the most likely overall winner in a bidding war for Channel 4. However, “foreign ownership of a key UK broadcaster may be seen as politically difficult”, the paper adds.
The Department for Digital, Culture, Media and Sport (DCMS) has also announced that it is looking at “clamping down on streaming services such as Netflix and Amazon Prime Video”, Sky News reports.
In a statement, the DCMS said it is considering “whether the regulation of video-on-demand services such as Netflix and Amazon Prime needs strengthening so they are subject to similar rules as traditional ‘linear’ broadcasters such as the BBC, ITV and Sky”.
Whether that increased government scrutiny will impact on the streaming services’ desire to take on Channel 4 remains to be seen.