Channel 4 Privatisation

Alun Cairns Excerpts

Tuesday 14th June 2022 Commons Chamber

[Lucy Powell]

So the hon. Gentleman now thinks that Channel 4 is not important to Leeds. Perhaps he might want to take up the issue with Leeds MPs and Leeds constituents, who take a very different view. They support what Channel 4 is doing in its levelling-up agenda, which is evident for all to see.

Channel 4 supports skills and widens access to the industry. At a time when employers are crying out for talent and people across the country are looking for jobs, Channel 4 is supporting thousands of young people and apprentices each year. The Secretary of State has said that her defining mission is

“ensuring that everybody from every background has access to the arts”,

so why is she undermining an important access driver in this way? Thanks to its unique publisher-broadcaster model, Channel 4 invests half a billion pounds a year on average in the independent production sector. That has helped to grow and start many of our most successful production houses.

[Alun Cairns (Vale of Glamorgan) (Con)]

The hon. Lady refers to spending on original content. In 2006, it was £516 million; by 2020, because of the fall in advertising income, it had fallen to £329 million. Does she accept that the current model of Channel 4 cannot survive and that it needs reform?

[Lucy Powell]

No, I do not. This year, it is the most profitable and successful that it has ever been, so I think the right hon. Gentleman’s figures are wrong.

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[Ms Dorries]

As someone who has worked in the industry, my hon. Friend is deeply knowledgeable about how Channel 4 and the industry works. As I said in a previous answer, “Up Next”, the broadcasting White Paper, makes it very clear that that distinctive British content that makes Channel 4 so successful is part of the criteria.

The broadcasting White Paper is a fantastic piece of work, and I strongly recommend that everybody in the House reads it, as it makes it very clear what the Government’s objectives are for the broadcasting sector. Furthermore, we are taking the decision as a Government to look at broadcasting in the round—to look at the whole broadcasting landscape in the UK. I know that the conversation and the debate are focusing mainly on Channel 4, but we have to consider broadcasting in the round right now.

In addition, Channel 4 faces a series of unique challenges—challenges that other public service broadcasters with different ownership models do not face. Streamers such as Netflix spent £779 million on UK original content produced in 2020, more than twice as much as Channel 4. While other PSBs, such as the BBC and Channel 5, have the freedom to make and sell their own content, Channel 4 has no inhouse studio. Its ownership model restricts it from borrowing money or raising private sector capital. It is left almost entirely reliant on ad revenues. Those revenues were already shifting rapidly online, and the competition is only set to heat up now that Disney+ and Netflix have confirmed their plans to enter the advertising market. In addition to that, we have, later this year, new, huge streamers coming into our homes, which will also, quite probably, be operating on an advertising model.

Under its current form of ownership, Channel 4 has fewer options to invest, fewer options to innovate and, crucially, fewer tools with which to grow. There are serious challenges that require serious plans to overcome, not the kneejerk reaction or hyperbole of the Opposition.

[Alun Cairns]

Will the Secretary of State join me in calling on the Opposition to engage positively in this debate? We all respect the interest in the independent sector and we all want to see it grow, and it will have that opportunity under the new model. Rejecting any form of change will simply undermine the industries that we are seeking to support.

[Ms Dorries]

I could not agree more. Labour may not like to hear it, its refusal to even engage with the profound changes in the broadcast landscape is further evidence that it does not have a serious plan for broadcasting. If it really wants to protect Channel 4 and to protect the wider broadcasting ecosystem, it is not enough to consider only Channel 4’s current success.

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[John Nicolson]

The hon. Gentleman is shaking his head. Feel free to intervene, rather than groan in agony. Apparently he cannot marshal the words to match his facial expressions.

Millions of Channel 4 viewers will have noticed the adverts on Channel 4, but the Secretary of State apparently has not, yet she presumes to pontificate on Channel 4 while junior Ministers breathlessly wait. It is like watching an unbenevolent Mr Dick from Charles Dickens fly his kite. [Interruption.] It is a literary reference. People may laugh at the clips, but such wilful ignorance debases the policy-making process. When she is misunderstanding the most fundamental part of her brief, but still thinks it appropriate to patronise the Channel 4 management and staff, it is painful to witness. Nor was that a one-off; the Secretary of State thought that Channel 5, as has already been quoted, had been privatised. She told Iain Dale of LBC that it was, citing the privatisation of Channel 5 as a model for Channel 4 privatisation. She said that it was privatised

“three years ago, five years ago maybe”

when she did that particular interview. There was only one problem: Channel 5 was never privatised. It was another excruciating on-air exhibition of ignorance.

The Secretary of State may not know much about the sector, but does she at least have the public on her side as the Government lunge at Channel 4? Apparently not, although she does not seem to know it. Let us look at the consultation she set up to assess public opinion on the proposed privatisation. At a November DCMS Committee session, the Secretary of State said:

“what is the point of having a consultation that 60,000 people respond to if I had already made my mind up what I was going to do with Channel 4? That would be an abuse, I think, and a waste of money and effort on behalf of a large number of civil servants. I would really like to see what those 60,000 responses say first.”

The message was clear: she would listen to the public, those who watch and love the channel.

People did respond to the Government when asked for their view. As the Secretary of State said, 60,000 responded in an impressive display of public engagement. What did the figures show after they were analysed? Those figures, which the Secretary of State told us it would be an abuse to ignore, were interesting. Some 96% of the public were against Channel 4 privatisation, although in yet another moment of tragicomedy, the Secretary of State announced to the Select Committee at her latest appearance that 96% of the public were in favour of privatisation.

[Alun Cairns]

I am not sure whether the hon. Gentleman is advocating no change for Channel 4, but if he is, how will he accommodate the fall in advertising income and its impact on the spend in Scotland, Wales, Northern Ireland and the English regions?

[John Nicolson]

As other hon. Members have already explained, Channel 4 is making record profits. Since the system seems to be working so well, I do not see the point of breaking it.

[Alun Cairns]

It is spending less.

[John Nicolson]

It is making plenty of programmes. In fact, the Secretary of State already said that so many production companies are being successful that they cannot keep up with the current demands. Conservative Members need to marshal their arguments and work out which they are advocating.

Once again, so we are all clear: 96% of the public in the Government’s own consultation process, which the Secretary of State said it would be an abuse to ignore, said that they opposed Channel 4 privatisation—so much for respecting the public will. It appears that the public matter as little as industry experts.

Let us turn to one of the main arguments put forward for the privatisation of Channel 4. The Secretary of State often says that she wants it to be able to compete with

“streaming giants such as Netflix and Amazon”.

She may have noticed that they do not have war correspondents, or at least that those who do appear are actors in movies, not journalists dealing with breaking news. The comparison is far from ideal, but let us briefly explore it anyway.

Amazon Prime is owned by a trillion-dollar company that uses its video streaming end as a loss leader. Unlike Channel 4, it does not make a profit, so it is far from a role model. What about Netflix, the other role model that the Secretary of State has in mind for a privatised Channel 4? That is not going so well either. It has racked up billions of dollars of debt and its share price has fallen by more than 70% in the last six months, which demonstrates the volatility of the market.

Unlike the Secretary of State’s chosen examples, Channel 4 is a commercial success that runs a profit, not a loss. Its real competitors are the current UK public service broadcasters such as the BBC and ITV. We all know that the future is digital and here Channel 4 leads the UK. We all know that linear numbers are down, but it is in a strong position to benefit from that trend as it is the UK’s biggest free streaming service, despite having a considerably smaller budget than the BBC. Also, of course, because it is publicly owned, it can reinvest extra revenue.

What if the nightmare happened and the Secretary of State got her way? Some on the Tory Benches—I suspect not those invited to participate in this debate—may be swithering and wondering what the future of Channel 4 will hold. They might consider that the Secretary of State, however dodgy her grasp of facts and of the issue, has promised that Channel 4 will remain a public service broadcaster. They might think, “We will have sold off another piece of the family silver, but at least we can all muddle through and things might not change that much.”

Well, not so fast: although the Secretary of State did promise that, whatever fate befalls Channel 4, it would always remain a public service broadcaster free at the point of use, that undertaking fell apart somewhat under cross-examination at the Select Committee. We discovered that Channel 4’s buyer need only keep it as a public service broadcaster for 10 years. The Secretary of State has now made it clear that the Government will have no locus over the broadcaster once that period is over. When asked if the owners would have to consult the Department after 10 years, the Secretary of State said:

“No, it will be privately owned. It will be up to owners.”

So I say to Tory Back Benchers who are uncertain about what to do, if the new owners want to make Channel 4 a streaming service, they can. If they would like to ditch the award-winning “Channel 4 News” with its new chief anchor Krishnan Guru-Murthy, it is up to them. The Secretary of State may be too scared to go into the studio to face him about Channel 4 privatisation, but do those Tory Back Benchers not want him and the news channel to be around to tackle the next Labour Prime Minister? Short-termism may come back to bite them. Say goodbye to “Unreported World”, which sends intrepid correspondents off to tackle unreported stories in some of the world’s most dangerous hotspots. They are astonishingly brave, but the show is expensive to make. Would a privatised company make it? No one at the channel thinks so.

The new owner could break up the company and sell it off. They could move it out of the UK. It is up to them entirely. The Secretary of State may argue that that is unlikely or would not make commercial sense, but do you really trust her judgment? Do you think she understands the detail? Will she even be around once this Prime Minister is gone? Who knows—it doesn’t really matter. What is important is that, once this 10-year period is over, the Government will have absolutely no power; it will be too late.

Reasoned argument has been tried and tested over Channel 4 privatisation. The arguments for privatisation never stack up. As a previous Secretary of State told me:

“too expensive, too unpopular, and too little in return.”

That Secretary of State had listened to the experts. This one does not seem to want to listen to the experts.

With an 80-plus seat majority, this ultimately, as we all know, will be up to Tory Back Benchers. Those of you not on the Government payroll do not much like your leader—we saw that and we saw how you voted. That we know and you often tell me you do not really believe in the culture wars—