Will government privatise Channel 4? Who owns TV channel, how is it funded and what did Nadine Dorries say
The Government’s decision to move forward with its Channel 4 privatisation plans has been heavily criticised
Culture Secretary Nadine Dorries and Location, Location, Location host Kirsty Allsopp have been involved in a Twitter argument regarding the plans to privatise Channel 4.
Channel 4 has said it is “disappointed” at the Government’s decision to proceed with plans to privatise the broadcaster without “formally recognising the significant public interest concerns which have been raised”.
The Government, which currently owns the channel, has been consulting on whether to privatise the broadcaster following concerns for its survival in the streaming era.
This is everything you need to know - including why the Government wants to privatise the channel, how Channel 4 is funded and what could happen if the decision goes ahead as planned.
Why is the Government planning to privatise Channel 4?
The Government has said that privatising Channel 4 is the way forward in order to secure its future needs amid concerns of its survival in the current streaming era.
A 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.”
A statement by the Department for Digital, Culture, Media and Sport (DCMS) said that it made the decision in order to allow the channel to “thrive in the face of a rapidly-changing media landscape”.
A DCMS spokesperson said: “Following an extensive consultation on the future ownership of Channel 4, the Culture Secretary has come to a decision and is now consulting with Cabinet colleagues.
“We want Channel 4 to flourish and thrive in the face of a rapidly-changing media landscape. It holds a cherished place in our broadcasting landscape and we want that to remain the case.
“We set out our preferred option for a change of ownership to give the corporation new freedoms to innovate and grow while continuing to make an important economic, social and cultural contribution to the UK. We will announce further details shortly.”
The Government has also argued that the move could allow Channel 4, 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.
Who owns Channel 4 - and how is it funded?
With the news regarding Channel 4’s potential privatisation dominating headlines, some have been left confused as to how the channel is funded.
To be clear, Channel 4, which was founded in 1982, is currently owned by the Government and receives its funding from advertising - not from the taxpayer. Channel 4 does not cost the public any money.
On the Channel 4 website, it states: “Unlike the BBC, Channel 4 receives no public funding. It is funded entirely by its own commercial activities.”
It explains that “most of our income comes from advertising revenue”. By comparison, the BBC gets the majority of its income from its £159 annual TV licence fee paid for by both homes and businesses.
Culture Secretary Nadine Dorries came under fire last year for failing to accurately explain how Channel 4 is funded, despite being the UK’s Culture Secretary and one of the leading figures deciding the future of a potentially privatised Channel 4.
Speaking in front of the DCMS select committee in 2021, Dorries said that the channel is “in receipt of public money”.
Tory MP Damien Green corrected Dorries, saying: “Channel 4 is not like the BBC, it’s not in receipt of licence fee money.”
Dorries was unable to reply to Green.
What has Nadine Dorries said?
In a thread of tweets regarding the decision to move ahead with privatisation plans, Dorries wrote: “Channel 4 rightly holds a cherished place in British life and I want that to remain the case. I have come to the conclusion that the government ownership is holding Channel 4 back from competing against streaming giants like Netflix and Amazon.
“A change of ownership will give Channel 4 the tools and freedom to flourish and thrive as a public service broadcaster long into the future. I will set out the future plan for Channel 4 in a White Paper in due course.
“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.”
Plans for the sale will be set out in a White Paper later in April, and will also be included in a new Media Bill for spring 2023, according to reports.
Dorries also added in another tweet: “Proceeds from C4 sale will be invested in left behind areas in indies and creative skills desperately needed in our rapidly growing creative industries. We made more films here in last Q 2021 than Hollywood, many more studios opening. Funding creative skills is key.”
What did Nadine Dorries say to Kirsty Allsopp?
The Culture Secretary became involved in a Twitter dispute with Kirsty Allsopp, who presents the Channel 4 show Location, Location, Location.
Allsopp first reacted to the news earlier this month when she tweeted that “no true Conservative would sell Channel 4” and that “Lady [Thatcher] will be spinning in her grave”.
Following Dorries’ opinion piece which was published in the Mail on Sunday, Allsopp tweeted that it was “crystal clear [Dorries] doesn’t understand why @Channel4, nor why it matters” and that the “divisive piece abuses her position and illustrates why she is entirely unsuited” to her job.
Allsopp wrote in another post whether it was “really ministerial” to describe those criticising the privatisation plans as a “lynch mob” while “at the same time complaining about having been accused of fascism”.
Dorries replied to Allsopp’s comments in a thread of tweets in which she wrote: “1. Kirsty, I’ve been made aware of your tweets and would like to respond. “Mrs Thatcher would be spinning in her grave.” It is very clear in Mrs Thatchers memoirs, “The Downing Street Years”, that she very much wanted to sell C4 in 1988.
“2. “C4 should be preserved as it is” - with decreasing advertising revenue and decreasing investment in new content, that is not possible. “At least to let it change as it wants, not as the Gov dictactes” - the Government own C4. This fact appears to be lost in the outrage.
“3. If C4 were ever unable to repay borrowings or liabilities, the burden would fall on the taxpayer, presenting the Gov with limited options. We have chosen an option to allow C4 to do exactly as you wish, thrive.
“4. There is of course the bonus a sale will bring to the entire sector which is that the proceeds of sale will be invested back into people from all backgrounds, especially those from left behind communities because talent is everywhere, not just in the SE.
“5. We will invest in skills in order to benefit from incoming demand due to our booming film and TV sector due to the favourable tax benefit/relief and funding this gov has put in place to encourage film industry to regard Britain as its home.
“6. Also, I love C4, especially Location Location, but as I say in my article, it’s time to look to the future. The channels salad days are in the past. Being owned by the Gov is restrictive. Time for C4 to fly the nest towards a very exciting future.”
What will happen if Channel 4 is privatised?
While the Government has insisted that privatising the channel will allow Channel 4 to effectively compete with streaming giants like Netflix and to “flourish and thrive long into the future”, analysts have estimated that a privatised Channel 4 could face 40% to 50% cuts to its programming budget.
Channel 4’s current £660 million programming budget is used for things like news and current affairs as well as original programming like the award winning It’s a Sin.
What this is likely to mean is cuts to content that don’t bring as much revenue in from advertising, which Channel 4 relies on for more than 90% of its annual revenues.
According to the Guardian, analysts also believe that as many as 60 TV production companies across the UK could be forced to shut their doors if Channel 4 was privatised.
Has Channel 4 clashed with the Government in the past?
Those against the plans to privatise the channel have said that the move from the Government is simply a way to take out one of its “biggest critics”.
One person tweeted: “Be absolutely clear. This isn’t about innovation or the arts or creative potential. A government of thin-skinned vandals is taking revenge on a critic by destroying it.”
In the past, Channel 4 and the Conservative Government have clashed over a variety of issues.
In 2019, the Conservatives threatened to review Channel 4’s broadcasting remit if they won the general election after the channel replaced Boris Johnson with a melting ice sculpture during its climate change debate.
Johnson failed to turn up for the debate, and Channel 4 did not allow for a replacement as the debate was “only for party leaders”. After being reported by the Conservatives to Ofcom, the channel was cleared of bias.
That same year, Channel 4’s head of news Dorothy Byrne also described Johnson as “a known liar” and compared his approach to the media with that of Vladimir Putin.
Who could end up buying Channel 4?
Foreign ownership could be a possibility in the sale of Channel 4, as long as Ofcom’s “fit and proper” test for ownership is successfully passed.
According to the Telegraph, ITV is understood to be interested in the channel, while Discovery has held informal talks. Rupert Murdoch, who, through his company News Corp, owns hundreds of local, national and international outlets, including the Sun, the Times, the Wall Street Journal and the New York Post, has also been linked to a possible takeover.
Bids from the likes of Sky, Channel 5 owner Paramount, Amazon and Netflix are all also possible.
Speaking to the newspaper, a government source said that ministers “can 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”.
While no price has been set yet by the Government, reports suggest that Channel 4 could be sold for as much as £1 billion.
What has Channel 4 said?
On Monday (4 April), Channel 4 released a statement in response to the Government’s proposal to privatise the channel.
This is the statement in full:
“With over 60,000 submissions to the Government’s public consultation, it is disappointing that today’s announcement has been made without formally recognising the significant public interest concerns which have been raised.
“Channel 4 has engaged in good faith with the Government throughout the consultation process, demonstrating how it can continue to commission much-loved programmes from the independent sector across the UK that represent and celebrate every aspect of British life as well as increase its contribution to society, while maintaining ownership by the public.
“Recently, Channel 4 presented DCMS with a real alternative to privatisation that would safeguard its future financial stability, allowing it to do significantly more for the British public, the creative industries and the economy, particularly outside London.
“This is particularly important given that the organisation is only 2 years into a significant commitment to drive up its impact in the UK’s Nations and Regions.
“Channel 4 remains legally committed to its unique public-service remit. The focus for the organisation will be on how we can ensure we deliver the remit to both our viewers and the British creative economy across the whole of the UK.
“The proposal to privatise Channel 4 will require a lengthy legislative process and political debate.
“We will of course continue to engage with DCMS, Government and Parliament, and do everything we can to ensure that Channel 4 continues to play its unique part in Britain’s creative ecology and national life.”
What has the response been like?
Following the news that Dorries will be pushing ahead with plans to privatise Channel 4, many have taken to social media to express their thoughts and concerns.
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.”
Chris Elmore, Labour MP for Ogmore, tweeted: “Minister’s refuse to help rocketing energy bills and food prices. Yet happy to privatise Channel 4, which doesn’t cost the public a penny. Shameful decision, driven by Tory dogma. Channel 4 is at the forefront of levelling up, investigative journalism and nurturing new talent.”
One person tweeted: “Channel 4 holds this government to account like no other. The Tories don’t like it and the truly appalling @NadineDorries is pushing ahead with its privatisation. This country is in the grips of the hard right, make no mistake.”
Another wrote: “Just a reminder - this all started because Channel 4 News ran an item about Boris Johnson’s dad that he didn’t like, and because they replaced him with a block of ice when he didn’t turn up at their election debate. Not because anyone else wants it.”
“Channel 4 does not cost the public any money. It’s profitable. It supports an independent TV production industry across the UK. It nurtures new talent. It invests in investigative & foreign journalism like no other. C4 is an asset to the UK. There is no good reason to privatise,” wrote another.