5 April 2022

Channel 4 will flourish outside public ownership – its privatisation is long overdue

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Channel 4 has been an immensely successful enterprise. It regularly commissions popular programmes that attract substantial audiences funded by advertising revenue. In recent years shows like It’s A Sin, Russell T Davies’ heart-rending tale about five friends growing up in the shadow of the AIDS epidemic, earned plaudits from critics.

News that the Government is going ahead with plans to privatise the channel has been met with a flurry of entirely predictable criticism, combined with doom-mongering about Channel 4’s prospects outside of state ownership.

Unsurprisingly, much of the backlash emanates from representatives of the TV industry, who are worried that the channel might stop buying their programmes (as it is currently mandated to do). But the central purpose of a TV channel should not be to help a particular industry or place, but to entertain and inform its viewers. In any case, a privatised Channel 4 would continue to commission domestic TV production – the only losers will be companies whose programmes aren’t what the channel is after.

Indeed, the onus should be on those who oppose privatisation to explain why the state needs to own a TV channel, particularly when that channel is clearly commercially viable. It would be like the state owning supermarkets and car producers. Just because they have owned a channel in the past does not mean they should continue to do so today.

The original justification for Channel 4 was ‘public service broadcasting’. But this harks back to an entirely different era. A time when the options were limited (there were just three other terrestrial TV stations when Channel 4 was founded) and investment in good quality content was scant. Today the opposite is true.

There are now billions being spent on audio-visual content, from Disney+, Amazon Prime and Netflix to Apple TV, ITVX and Sky. The global spend on content is expected to reach $230 billion this year – with £6 billion being spent in the UK alone on big budget productions. In fact, between 2008 and 2018, Britain’s domestic production industry dependence on public sector broadcasters fell from 64% to 42%, as international investment streamed into the industry.

Not only that, thanks to YouTube and other sites, we have access to an immense backlog of content of all types and genres appealing to every age and interest. We are living in a boom era for entertainment, one that would have been unimaginable just a generation ago when Channel 4 was founded.

In this context, there’s every reason that Channel 4 will flourish in private hands. As it stands, Channel 4 is unable to make its own programmes (unlike ITV’s successful Studios), has restricted access to capital, and a stringent public service remit. Freed from those constraints, the broadcaster will be able to compete much more successfully.

A privatised Channel 4 would be able to expand its digital output to compete with streaming platforms, undertake strategic partnerships and acquisition globally, expand into international markets, and raise more cash from financial markets to produce even more content. This would help safeguard the channel against falling television advertising revenue (which still makes up over 90% of Channel 4’s revenue).

Some see this move as the Government getting its own back Channel 4 for its left-leaning news coverage. There may even be some truth to that claim, but it’s hardly as though privatisation represents some kind of Putin-style state takeover of the media. Quite the opposite. Channel 4’s news coverage will be just as independent, if not more so, in private hands.

The central issue at play is whether the state, in the third decade of the 21st century, still needs to own a commercially viable television channel. There are those who have a status quo bias or like the state to own things for the sake of owning things. But outside of that ideological mindset, the case for privatisation is obvious.

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Matthew Lesh is Head of Public Policy at the Institute of Economic Affairs.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.