November 2021
Dear Constituent,
Thank you for contacting me about Channel 4.
After receiving other emails from constituents expressing their concerns about the future of Channel 4, I wrote to the Department for Digital, Culture, Media and Sport for a response. I have attached the contents of their letter below that I hope you will find of interest and will help to explain the Government’s current position on this matter:
“Thank you for writing on behalf of your constituents about the future of Channel 4.
The Government is consulting on whether an alternative ownership model for Channel 4 (but one where it retains a public service remit) may be better for the broadcaster, and better for the country. We want Channel 4 to continue to be a public service broadcaster (PSB), and we want it to continue to contribute socially, economically and culturally. But all linear TV broadcasters are facing significant challenges in today’s changing media landscape, and these challenges are only set to intensify.
Indeed, Ofcom, in their latest recommendations to the Government on the future of public service media published on 15 July, outlined what it called the ‘rapid change in the industry – driven by global commercial trends and a transformation in viewing habits - which is making it harder for PSBs to compete for audiences and maintain.’ Your constituents can read Ofcom’s full review here.
Channel 4 is uniquely constrained in its ability to meet these challenges while it remains under public ownership - particularly because its access to capital and ability to pursue strategic partnership opportunities is limited.
Your constituents have highlighted that Channel 4 is in good financial health. While it is correct that Channel 4 recorded a surplus last year, this was only as a result of it cutting its programme budget by £138 million. In terms of the channel’s longer-term financial sustainability, Channel 4’s revenue is largely undiversified and driven almost entirely by advertising activities. Linear TV advertising accounted for over 90% of Channel 4’s revenue in 2020, but total linear advertising revenues have declined across the whole sector at a compound annual rate of 2.5% since 2015. Moving Channel 4 into private ownership may allow it to diversify its income streams, access new capital, and create strategic partnerships only available through the private sector.
With regards to the channel’s importance to independent production, the Government recognises that Channel 4 has consistently delivered on its remit in the decades since being established, including supporting the UK’s independent production sector. Forty years on, this sector is now flourishing, with increased spending on commissions from both PSBs and the multichannel groups. The incredible growth of the sector has seen the contribution of non-PSBs to sector revenue rising from 36% to 58%, due in large part to the growth of international revenue. It is the Government’s assessment that changes to the publisher-broadcaster restriction could allow Channel 4 to achieve greater financial diversification and shift its reliance away from linear advertising revenues.
In making any changes to Channel 4’s ownership model it is noted that this may have both costs and benefits for the independent production sector and the Government is seeking views on this, both through the consultation and in meetings with stakeholders. The Government also intends to maintain Channel 4's remit and is seeking views on possible amendments to it - this could include strengthening the remit in certain areas.
Finally, with regards to levelling up, the Government recognises that Channel 4 makes an important economic and social contribution across the regions and nations of the UK through its national HQ in Leeds, its creative hubs in both Glasgow and Bristol, and its investment in regional production. As stated in the consultation document, the Government “considers that a continued and renewed commitment to levelling up may be appropriately tied to any change in ownership as the Government looks to improve living standards, investment, opportunity and outcomes across the whole country”. Any options we decide to pursue following the consultation would need to consider how to ensure Channel 4 continues its role in supporting levelling up across the UK. You can read about the results of the consultation at the following link.
Thank you again for writing to the DCMS and I hope your constituents find this response useful.”
With best wishes.
Kind regards,
Jonathan Lord MP
Member of Parliament for Woking