A closer look at the Government’s plans to privatise Channel 4

The broadcaster could be put up for bid from the spring of 2023, with foreign ownership possible.

The Government is set to proceed with plans to privatise Channel 4 (Lewis Whyld/PA) (PA Wire)

The Government is set to proceed with plans to privatise Channel 4.

Here are answers to some of the key questions about the decision.

– Why does the Government want to privatise the broadcaster?

The Government has argued that Channel 4’s long-term future needs to be secured amid concerns for its survival in the streaming era.

A statement by the Department for Digital, Culture, Media & Sport (DCMS) said it had made the decision to allow the channel to “thrive in the face of a rapidly-changing media landscape” while a Government source said the move would “remove Channel 4’s straitjacket”.

Culture Secretary Nadine Dorries added in a tweet that she wanted the broadcaster to remain a “cherished place in British life”, but felt that Government ownership was “holding Channel 4 back from competing against streaming giants like Netflix and Amazon”.

She said: “I will seek to reinvest the proceeds of the sale into levelling up the creative sector, putting money into independent production and creative skills in priority parts of the country – delivering a creative dividend for all.”

The Government source told the PA news agency: “C4 is a great business with a strong brand built around it being creative, innovative and distinctive but a change of ownership will remove its straitjacket, giving C4 the freedom to innovate and grow so it can flourish and thrive long into the future and support the whole of the UK creative industries.”

The Government has also argued that a sale could allow the channel, which has limited ability to borrow money or raise private sector capital to invest in new platforms and products and cannot own and sell its own content, to establish its own production house and generate its own intellectual property.

– What is the current model?

Channel 4, which was founded in 1982 to deliver to under-served audiences, is currently owned by the Government.

It receives its funding from advertising, not from the taxpayer.

– What has happened so far?

Ministers launched a public consultation into a potential change in ownership of the channel last July and Ms Dorries has been working through 60,000 responses to the consultation.

The Government informed the broadcaster of the decision to go ahead with the sale on Monday. It comes after years of clashes between the two sides.

– What happens now?

The DCMS said further details will be announced “shortly”.

Channel 4 chief executive Alex Mahon said “there will now be a long process ahead”, writing to staff in an internal email on Monday that it could take 18 months or more for the required legislation to pass through the House of Commons and then Lords.

“During that time, we’ll continue to work with DCMS and Government, and with our supporters across the industry to make the arguments to ensure that Channel 4 can continue to deliver its remit,” she said.

Plans for the sale will be set out in a White Paper later in April and will be included in a new Media Bill for spring 2023, according to reports.

Bids for the broadcaster are expected to come in next year with a view to complete the sale in early 2024, ahead of the next general election expected at latest in May that year, the Daily Telegraph reported.

– How has Channel 4 reacted?

It is disappointing that today’s announcement has been made without formally recognising the significant public interest concerns which have been raised

Channel 4 spokesperson

A spokesperson for Channel 4 said it was “disappointed” with the decision, but would “continue to engage” with the Government on the process to “ensure that Channel 4 continues to play its unique part in Britain’s creative ecology and national life”.

The channel explained that it presented the Government with an alternative to privatisation that would “safeguard its future financial stability” and allow it to do more for the public, creative industries and the economy.

Ms Mahon also said in the internal email to staff that they had proposed a “vision for the next 40 years” which was rooted in “continued public ownership” and “built upon the huge amount of public value this model has delivered to date and the opportunity to deliver so much more in the future”.

However, she added that ultimately the ownership of the channel was for the “Government to propose and Parliament to decide” and that her priority now was to “look after all of you and the wonderful Channel 4 spirit”.

The broadcaster said that it will continue to engage with the Government during the legislative process and plans to do everything it can to “ensure that Channel 4 continues to play its unique part in Britain’s creative ecology and national life”.

– What have other critics of the move said?

The Thick Of It creator Armando Iannucci tweeted: “They asked for ‘a debate’; 90% of submissions in that debate said it was a bad idea. But still they go ahead. Why do they want to make the UK’s great TV industry worse? Why? It makes no business, economic or even patriotic sense.”

The writer of It’s A Sin, Russell T Davies, has previously said privatising Channel 4 would be a “great crime” that would result in programmes like his hit series not being made.

Tory MP Sir Peter Bottomley saying he opposes the privatisation as he feels it is “bad for the diversity of television, bad for viewers and bad for independent producers”.

Philippa Childs, the head of the broadcasting, entertainment, communications and theatre union, described the action as a “short-sighted sale of an incredible UK asset”.

– What have proponents of the sale said?

Baron Grade of Yarmouth, who was the channel’s chief executive between 1988 and 1997, has said “the status quo is not an option” and that its current remit is like a “straitjacket” in today’s media landscape.

He told the House of Lords Communications and Digital Committee last October: “Channel 4 needs to do what every other free-to-air advertiser-supported business is doing, which is to own its own IP and to be able to gain scale.

“Everything in the Channel 4 constitution presently is against that and therefore it will, in my view, in a very short time really begin to struggle.”

– Who could buy Channel 4?

Foreign ownership has not been ruled out, as long as the regulator Ofcom’s “fit and proper” test for ownership is passed, according to reports.

The Telegraph reported that ITV is understood to be interested, while Discovery has held informal talks and Rupert Murdoch has been linked to a possible takeover. Bids from Sky, Channel 5 owner Paramount, Amazon and Netflix are also possible.

A Government source told the newspaper that ministers “expect a lot of interest in purchasing C4 from a range of serious buyers who want to build on C4’s strengths and help unleash its full potential.”

– How much could it be sold for?

No price tag has been set by the Government yet, but reports suggest the channel could be sold for as much as £1 billion.

Ministers have said they will seek to reinvest the proceeds into the creative industries.