Channel 4 Makes Privatization Alternative Public: Says Sale Could Lose UK Economy Up To $3.8BN Over Next Decade

A privatized Channel 4 could lose the UK economy up to £3BN ($3.8BN) over the next decade and support 4,000 fewer jobs, according to the It’s a Sin network’s alternative privatization proposal, unveiled to journalists today.

Channel 4 CEO Alex Mahon this morning publicly sent out and discussed the network’s failed 4: The Next Episode plan, which was presented to Culture Secretary Nadine Dorries in February as a privatization alternative with detailed cost-benefit analysis. It was roundly rejected, as indicated in last week’s UK government Broadcasting White Paper about the future of British television.

According to analysis embedded in 4 The Next Episode, which also included a set of proposals for a reformed publicly-owned Channel 4, privatizing the network would create a total £8BN-£10BN for the UK economy over the next 10 years, compared with £11BN if it was reformed and remained in public ownership.

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The most extreme scenario would thereby lead to a £3BN gap, which would only be slightly mitigated by the circa-£500M value of the sale to the government.

In the nations and regions, a privatized Channel 4 was estimated to make £1BN-£2BN, compared to £3.5BN in public ownership. The number of jobs supported if Channel 4 is sold was forecast at 9,000 to 11,500, compared to 13,000 if public.

Furthermore, Channel 4 said exportable British IP would “no longer be an organizational priority” for a new buyer, while a reformed publicly-owned operation could create 100,000 jobs and £500M-£1BN of production sector UK IP exports over the next decade.

The likes of ITV, Discovery, Paramount and Sky-owner Comcast have been rumored as potential buyers of Channel 4, along with outside bets such as BBC Studios or European giants including Vivendi and Bertelsmann.

JV Plan

4 The Next Episode set out Channel 4’s groundbreaking plan to create a JV with an external investor that would commission British content and allow the network to retain the rights to its shows for the first time in its 40-year history. The plan was leaked to the Financial Times several weeks ago.

Channel 4 said the plan had already started garnering interest and would have generated £1BN in investment in British content over the next five-to-10 years, “establishing a one-stop shop for financing for independent production companies and reinvesting secondary sale of IP into domestic content commissioning.” Over the same period, commissioning spend would increase by £300M, said Channel 4.

“The JV would invest in British creative content, combining Channel 4’s commissioning expertise, distinctive British flavour and ‘shop window’ for curated content with private capital,” added the proposal.

“These reforms will unlock capital that will drive a substantial increase to Channel 4’s public contribution, spreading opportunity to people and parts of the country that are under-represented in our cultural institutions and on our screen.”

Much of the discussion around Channel 4 privatization has centered on its unique model in the UK’s broadcasting landscape as a publisher-broadcaster, meaning it cannot produce its own shows and retain rights. The government is seeking to reform this model and would force a quota of just 25% of shows required to be made by third-party producers, leading to a fundamental reshaping of the landscape.

The innovative 4 The Next Episode JV plan was set alongside a wealth of other proposals to improve Channel 4’s offering to the UK, including:

  • A commitment to ordering at least 50% of content from outside London.
  • Doubling the number of roles based outside of London by 2025 to 600.
  • Streamlining presence in London by creating a London base that “supports our new ways of working.”
  • Helping 100,000 young people into the creative industries by expanding the 4Skills School.

However, it appears the government has no plans to change its mind over Channel 4’s future.

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