Privatising Channel 4: What could new ownership mean and who might buy it?

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Image source, Channel 4
Image caption,
Roisin and Joe from Channel 4 programme Gogglebox

The government has announced that it wants to privatise Channel 4, which broadcasts programmes including Gogglebox, Countdown and acclaimed drama such as It's A Sin.

Culture Secretary Nadine Dorries has said that government ownership is holding it back, but critics argue that the quality of Channel 4's programmes would suffer from a sell-off.

What is Channel 4 and why is it being privatised?

Launched in 1982, Channel 4 is a government-owned TV broadcasting company, which now consists of 12 channels including Film4, E4, and its own streaming service, All 4. However, instead of receiving public funding (like the BBC), Channel 4 gets its money through advertising.

Unlike other broadcasters, it doesn't make its own shows - they are all made by independent production companies. Any profits go back into programme-making.

However, the government says that because TV advertising revenues are declining (along with traditional TV viewing) and programme budgets are rising, Channel 4 is being held back from competing with other TV services.

It says it wants to sell Channel 4 to a private company.

Image source, Getty Images

What could be the advantages of selling C4 off?

The independent producers who make programmes for Channel 4 can make money when shows are sold to streaming services, or to broadcasters in other countries.

A privatised Channel 4 could make more money from those rights, and also make programmes itself. What's more, it could earn money by making shows for other broadcasters around the world - as BBC Studios and ITV Studios do.

Channel 4 would also be free of the current legal limits on how much money it can borrow.

"There are constraints that come with public ownership, and a new owner could bring access and benefits, including access to capital, to strategic partnerships and to the international markets," the government said when it launched a consultation into the move last July.

"Private investment would mean more content, and more jobs."

The culture secretary said that proceeds from the sale of Channel 4 would be reinvested into independent production, "delivering a creative dividend for all".

What are the potential disadvantages?

People in the broadcasting industry have expressed concern that some of Channel 4's less commercial output - such as drama or news and current affairs - might suffer.

Kirstie Allsopp, who hosts Channel 4's long-running property programme Location, Location, Location, said on Twitter: "Profit will be king and the passion & inclusion of Channel 4 will be lost."

Last June, Channel 4 programming director Ian Katz cited "the level of depth" of the news as one part of the schedule that may come under pressure, as well as programmes featuring under-represented voices.

Certain conditions could be written into the sale - such as that Channel 4 must still spend a certain portion of its budget with independent producers, or show a certain amount of news per day, or make a certain amount of programmes outside London.

However, Dorothy Byrne, the former Channel 4 head of news and current affairs, has asked: "How long would it really be before this commercial owner said, 'We really can't afford very expensive Channel 4 News at an hour in prime time.'"

What happens next?

Media analysts Enders have suggested that Channel 4 would be worth between £600m and £1.5bn.

Buyers could include existing UK commercial broadcasters like ITV and Sky, or "international companies with existing UK broadcasting operations and subscale streaming alternatives" like Discovery and Paramount, Enders said.

The privatisation is expected to be included in the forthcoming Media Bill, a new law that must be debated and passed in Parliament.

Bids are expected to come in next year with a view to completing the sale in early 2024, the Daily Telegraph reported.

However, the move has already met with criticism from Labour and some Conservative MPs, including the former culture secretary Jeremy Hunt, who told Sky News: "As it stands, Channel Four provides competition to the BBC on what's called public service broadcasting - the kinds of programmes that are not commercially viable - and I think it'd be a shame to lose that."