Channel 4 privatisation is a solution in search of a problem


The writer is a founder of Wonderhood Studios and is a former chief executive of Channel 4

Legislation is easier to announce than implement and so it will prove with the government proposed privatization of Channel 4.

A remarkable amount of professional effort is currently being wasted in engineering a solution in search of a problem: selling off the commercially funded but state-owned broadcaster. To begin with, there’s a sequencing issue: ministers expect MPs to vote blind on the principle of a sale without providing any detail on the impact of different outcomes on viewers, on jobs and on the long-term integrity of the UK’s free airwaves.

Despite tabling a sensible alternative plan (one that MPs are being denied the opportunity to debate), Channel 4’s board and leadership stand accused of having their heads in the sand. Meanwhile, a set of criteria for a successful bidder is nowhere to be seen. Decisions of such magnitude ought not to be made with so little thought as to how value for the nation is created or destroyed.

There’s another problem. How can investors sensibly price Channel 4 today without a clear idea of ​​the obligations that come with its future license? The government seeks the highest bid price but also hopes that the channel will continue to deliver at least as much public service (lossmaking) programming. Good luck with that kind of magical thinking in the City.

Ministers also claim that the proceeds of a sale will be directed towards a one-off dividend for the creative industries. Again, this is unclear. And it is not possible to compare an undisclosed figure with the future contribution of a Channel 4 remaining in public ownership.

The reality is that a Channel 4 accountable to banks, private equity or foreign owners will be obliged to maximize profit. It will seek efficiencies that will inevitably include, over time, reducing its obligations as a public service broadcaster – no matter what promises are made at the outset.

It is worth noting that the sale to a foreign media empire of a national broadcaster would be prohibited on public interest grounds in many western countries, including the US. Why the rush to flog the family silver?

A new owner would be permitted to make the majority of Channel 4’s programs in-house. Under the current system hundreds of smaller companies benefit from the risks that Channel 4 is obliged to take by working with them. And ministers remain silent on the future of Film 4, which for decades has helped to unearth fresh seams of British film-making talent including Steve McQueen and Danny Boyle. At risk is a key pillar supporting the UK’s ability to confidently tell stories that matter to us.

The government has made it known that it would welcome bids from ITV, Sky and Channel 5 to take over Channel 4 but is mute regarding competition implications. In the words of Phil Smith, director-general of ISBA, the body that represents British advertisers: “It is remarkable that ministers appear comfortable with an outcome which could deliver excessive dominance in a market which already lacks transparency.”

Ministers claim that Channel 4 is being held back under public ownership and that its finances should “No longer be underwritten by a granny in Southend or Stockport”. But the assets of Channel 4 originate from the proceeds of its commercial partnerships, not from the taxpayer.

MPs should ask whether the government optimism around “freeing” Channel 4 is justified. Our representatives were not elected to implement an ill-conceived idea that will wipe out jobs, maim a successful British export industry and deny the next generation of creative entrepreneurs the benefits of the last 40 years of innovation. The Channel 4 model has proved itself resilient. Civil servants, bankers and lawyers should be allowed to turn their attention elsewhere – to something broke that really does need needing.



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