Channel 4 should be sold before it’s too late

By Joanna Marchong, investigations campaign manager


Channel 4 hangs over taxpayers like the sword of Damocles. While the corporation does not directly rely on government support for its day-to-day finances, what it does have is the assurance that should the coffers run dry, taxpayers will ultimately come to their rescue with a bailout.

The broadcaster was created under the Broadcasting Act 1980 as an alternative to the BBC and ITV. Almost 45 years later,  TV channels number in the hundreds and younger people are turning towards a plethora of on-demand streaming services. Needless to say, Channel 4  faces an uphill battle to remain relevant and profitable amidst fierce competition; and this is reflected in their increasing financial pressures.

Channel 4 is reliant on advertising income for profitability. Digital and linear advertising revenue made up 89 per cent of the channel’s revenue in 2022; down from 91 per cent in 2021. The biggest loss in that time was linear advertising which fell by £69 million (or 9 per cent). Across the board, advertisers are cutting back on spending due to economic uncertainty. In other words, Channel 4’s primary income stream is compromised. 

In a recent select committee meeting, Channel 4 bosses stated that to mitigate the loss of advertising revenue caused by the decline of linear television where the bulk of the revenue stems from, they would be attempting to increase revenue from their streaming service. This would represent a major shift in their business model. Although there was a £31 million increase in revenue from digital advertising in 2022, this made up less than half of the £69 million lost in linear advertising. In total, when non-advertising revenue is also taken into account the Channel 4 Corporation was left with a £22 million reduction in total revenue in 2022 compared to the year prior. 

To add to their woes, in the select committee meeting held by the Department for Culture, Media and Sport, Channel 4’s bosses acknowledged that the channel had seen a 10 per cent fall in their streaming service views; placing the blame on the fact that covid had produced inflated viewership numbers. If this downward trend continues however, there is a risk that already cautious advertisers and investors will pull away; compounding existing financial concerns.

It is clear that the bosses at Channel 4 are skittish. Their response to these worrying financial markers has been to announce its biggest job cut since the financial crisis. Reportedly, Channel 4 will be cutting up to 200 jobs. According to their latest financial accounts, Channel 4’s workforce stood at 1,200, meaning that the cut will account for almost 17 per cent of the workforce. The total direct costs of employment in 2022 was £125 million, which represents a significant liability but also an opportunity to make savings.

Cutting costs is a temporary fix that may ease the pain in the short to medium term, but there are fundamental problems that remain unresolved. The Channel 4 model is, in many ways, still stuck in 1980; and in a quickly evolving media landscape, it looks increasingly like a liability to taxpayers. The government should consider nipping this issue in the bud while it has a chance. Quite simply, there is no logical reason for Channel 4 to still be in public hands. If the channel were to be sold while it still has value, it could generate revenue for the exchequer in the billions. Not only would this free taxpayers of an asset on a downward trajectory, but it would give Channel 4 the resources and space it needs to truly compete in the modern commercial market.

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