Ministers are considering whether there is still a need for Channel 4 to exist in its current form, raising the prospect that the broadcaster will be privatised.
John Whittingdale, the culture minister with responsibility for broadcast policy, told a fringe event at the Conservative party conference that the channel was struggling financially and hinted that a sell-off could be on the cards.
He said: “Unlike the BBC, Channel 4 survives as an advertising-funded model. With the advent of the streamers and other competing services that model is under considerable strain.
“We do need to think about Channel 4 and whether there is still a need for a second publicly owned public service broadcaster, or what function it should fulfil. And that is something we are giving a lot of thought to.”
Channel 4 is commercially funded but is ultimately owned by the government, with all money going back into the broadcaster, which commissions all of its programmes from independent producers.
Individuals at the top of government, including the prime minister’s adviser Dominic Cummings, have made no secret of their disdain for Channel 4. They were especially aggrieved after Dorothy Byrne, the broadcaster’s former head of news and current affairs, delivered a speech at last year’s Edinburgh television festival lambasting Boris Johnson as a liar.
During the general election campaign a Conservative campaign source pledged to review Channel 4’s licence after they replaced Johnson with a melting ice sculpture when the prime minister failed to turn up to a climate change event.
Whittingdale is a longtime proponent of Channel 4’s privatisation, having first proposed such a move in 1996, arguing the channel needs external financial backing in order to survive. The government considered a sell-off when Whittingdale was culture secretary in 2015 but ultimately backed down in the face of an intense lobbying campaign from the broadcaster. Channel 4 then saw off a bid by the government to force it to move its headquarters outside London, instead agreeing to set up three regional bases in Leeds, Bristol, and Glasgow.
Earlier this year the broadcaster was forced to make enormous cuts to its programme budget because of the pandemic-related collapse of the advertising market. However, it has since indicated that recent improvements to the advertising market means it will soon be able to reverse some of these cuts.
Channel 4’s annual report, due at the end of the month will provide further details about its financial sustainability, which had seen revenues stable at around £900m a year until the pandemic hit. Viewing figures for its All 4 streaming service also increased 27% year-on-year as Britons were stuck at home during the pandemic.
Although the broadcaster prides itself on investing in new British talent, its biggest ratings-winner is The Great British Bake Off, which was poached from the BBC. It has also come under ratings pressure from Channel 5, which has seen its viewing figures soar thanks to less challenging but more popular programmes about British countryside life, railways, and royal history.
Whittingdale also told an event hosted by the free-market Institute of Economic Affairs thinktank that the licence fee, which funds the BBC, will probably survive in its current form for the rest of this decade.
He said a key problem for people wanting to turn the BBC into a subscription service was the inability to password-protect Freeview: “There is no way you can introduce a subscription service on Freeview … I don’t think the licence fee will survive in the longer term. But for the moment it is imperfect but the best means of paying for the BBC.”
Whittingdale also said he had been pleased with the BBC’s new director general, Tim Davie. “His first action was to restore Rule, Britannia! to the Last Night of the Proms. He’s also recognised there is a lot of work to do to correct the perception of bias.”
