Critics from within the UK TV industry have described the UK government’s plans to proceed with the privatisation of Channel 4 as ill-informed, ideological rather than logical (fuelled by the current government’s dislike of Channel 4’s robustly independent news coverage), and as “a solution in search of a problem”, But if it does go ahead, what are the implications for the UK’s TV sector, asks Neil Anderson, analyst at Ampere Analysis in an Insight blog post.In a 2021 report, Ampere looked at options surrounding the privatisation of Channel 4 and concluded that attracting credible buyers willing to pay more than £500 million (€600m), without adapting or dropping the current remit, would be a challenge. “For the UK to generate more from a sale, such as the £1 billion hoped for by the government, C4’s remit would need to be relaxed,” he suggests. “The broadcaster’s unique publisher-broadcaster model would need to be dropped or amended to enable a buyer to take advantage of in-house production or exploitation of existing content and to improve margins,” he advises.According to Anderson, margin growth to levels in line with other commercial broadcasters would largely come at the cost of content spend—and in particular, original content spend with independent producers. “C4 plays a crucial role in stimulating the UK independent production sector and supporting smaller UK producers” he says. “Ampere Commissioning data indicates that C4 has an outsized impact on smaller UK producers, and represented 17 per cent of UK commissions with small independent producers between 2019 and 2021. By contrast, C4 is responsible for just 8 per cent of UK TV companies’ overall spend on content,” he reports.“Analysis of 200 production companies working with C4 over the last two years showed that C4 was their principal partner in half of cases,” he notes. “Consequently, as many as fifty to sixty independent production companies would be at risk of closure if a new buyer sought to improve margins by cutting original content investment. Content cuts would have a greater impact on smaller, regional productions and in remit-related programming. This would also conflict with the UK government’s ‘levelling up’ regional growth agenda,” he contends.In terms of C4’s contribution to the UK production sector, in a 2022 report, Ampere estimated that C4 commissions contributed over £300 million in revenue to UK independent producers in 2020. Independent suppliers working with C4 benefit from continued investment in risk-taking and innovative projects and the ability to own their own intellectual property, selling content domestically and internationally.“Increased global competition and changing audience habits pose increasing challenges to traditional TV broadcasters; however C4 under its current model continues to maintain its revenue and content investment, managing the transition to hybrid distribution strategies at the same time as delivering its public-service remit,” he suggests. “And it costs the UK tax payer nothing. Selling off C4 with its unique remit and model left intact achieves little for the public purse. Boosting the sale value by removing its obligations would ultimately result in irreparable damage to the UK’s hitherto thriving independent production sector,” he warns.
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