Channel 4: Privatisation

Brendan O'Hara Excerpts

Wednesday 21st July 2021 Westminster Hall

[Brendan O'Hara (Argyll and Bute) (SNP)]

I thank the hon. Member for Wallasey (Dame Angela Eagle) for securing this debate on what she described as the wanton cultural vandalism that the UK Government are planning. The UK Government’s plan to privatise Channel 4 is completely unjustified. It is politically motivated and totally vindictive. When viewed in the wider context of other legislation going through Parliament on voter suppression, the right to peaceful protest and undermining the Electoral Commission, it is deeply worrying for our democracy.

Not only is this further evidence of a Government allergic to criticism and terrified of independent scrutiny; they are also ideologically driven to undermine anything that proves that public service can be delivered by a publicly owned organisation. By any measure, Channel 4 is and has been a success. It has more than met the remit it was given. As we have heard, it has been responsible for some of the greatest creative and commercial successes in UK television and film in the past 40 years. It has given creative opportunities to people who otherwise would never have had their voice or ideas heard, and it has taken a London-centric industry and reminded it that there is life on these islands beyond London. In short, Channel 4 has achieved what it was asked to do, and viewers like what it does.

Why are this Government so determined to change something that has been a demonstrable success? It is not for the money: the way Channel 4 is structured means that it does not have shelves of tapes or mountains of intellectual property rights waiting to attract a potential buyer. Any money generated would likely be absolutely minimal.

It is beyond credible that the UK Government honestly believe that UK viewers would be better served by Channel 4 being subsumed by one of the huge international TV conglomerates. As it is currently constituted, Channel 4 can experiment with format and take risks with new writers, and it can occasionally bomb without having to explain why profits might be down this year to an angry accountant representing a consortium of international investors. Let us be honest: not one of those multinational TV giants will give two hoots for the hugely successful model of spending outside London and supporting independent film and television production in the nations and regions.

The Government also know that even though Ofcom found that the multi-award winning “Channel 4 News” has been one of the most trusted media sources of information during the pandemic, no giant profit-driven multinational TV conglomerate will invest the money to continue to support it. That is where this begins to make sense: in the absence of any commercial, creative or public interest reasons for privatising Channel 4, one can conclude only that the motivation is politically driven spite. Channel 4 is the one thing that the Government fear most: a public service broadcaster that delivers good, informed and wholly independent news, and that makes people think, question and challenge what is going on around them.

Unlike the BBC, Channel 4’s greatest strength is that it provides that public service without relying on the UK Government for its finance. Unfortunately, its greatest strength has become its greatest weakness. This Government are gerrymandering the electoral map, curtailing citizens’ right to protest, and removing the teeth of the country’s electoral watchdog, so the last the thing they want is an independent non-compliant media. That, more than anything else, explains why they are determined to privatise Channel 4. The Government know that if they do, it will not come back, but has that not been their intention from the very start?

--- Later in debate ---

[Mr Whittingdale]

If my right hon. Friend will forgive me, I am going to come to those points. Given the limitations of time, I am anxious to do so.

I do not dispute the list of programmes, many of which are great, made by Channel 4 over the past 40 years. There are some real jewels among a lot of other programming. It was once said that Channel 4 is a public service tail wagged by a very large commercial dog, and that is the consequence of the model under which it operates. I have enjoyed things such as “It’s a Sin” and “Gogglebox”, and I want to talk specifically about “Channel 4 News”.

Occasionally, I have been cross with “Channel 4 News”. I have been just as cross with Sky News and BBC News. Channel 4 is an essential contributor to plurality. It is worth bearing in mind—again, this has not been recognised in the debate—that “Channel 4 News” is not actually produced by Channel 4. It is an ITN production, and ITN has done a terrific job in providing news programming that is different from the other broadcast news services. It has also been extremely successful internationally, as it has an Oscar-nominated newsroom and has won five Emmy awards.

[Brendan O'Hara]

Will the Minister give way?

[Mr Whittingdale]

If the hon. Gentleman will forgive me, I am not going to have time to give way.

I absolutely pay tribute to ITN for the work it has done for Channel 4, and it is certainly our intention that, whatever happens to Channel 4, news should remain a major part of its schedule. However, there have been huge changes. When Channel 4 was created, there was a choice between the BBC and ITV. Channel 4 was founded by a Conservative Government in 1982 to provide alternative viewpoints, and it has been very successful in doing that. Since that time, we have seen the advent of satellite television and the coming of digital terrestrial television. Now we have the streaming services, so there has been a huge explosion in choice. Some of that content, which was originally not available and which Channel 4 was set up to provide, is now available in a large number of different places, so Channel 4 needs to adapt to that.

The latest Ofcom report on the future of public service broadcasting states:

“Rapid change in the industry—driven by global commercial trends and a transformation in viewing habits—is making it harder for public service broadcasters to compete for audiences and maintain their current offer… Change needs to happen—and fast.”

That is why we have set up the review of public service broadcasting, and why it is right to consider whether Channel 4 is best placed to continue to thrive under the current ownership model, because there are some worrying signs.

Channel 4 is entirely dependent on advertising, unlike other broadcasters such as ITV, which has successfully diversified into production, or the BBC, which can rely on the licence fee. Channel 4 relies on advertising. More than 90% of its revenue comes from linear TV advertising, and advertising is under pressure. It is likely to come under greater pressure, in part due to the actions that Parliament is going to take in restricting advertising spending on, for instance, foods that are high in fat, salt and sugar, and possibly such spending with respect to gambling, which we are considering at the moment. Therefore, that model is already coming under pressure.

Competition from the streaming services is almost inevitably going to lead to a decline in audience share over time as more and more content is provided by such services, which can outspend Channel 4 by a factor of 10 with respect to how much they can invest in high-quality content.

Reference was made to Channel 4’s performance. Yes, it did well to record a profit this year, but it is worth bearing in mind how it did so. It is not difficult to continue to make a profit if spending on content is cut by £138 million. That is what happened. Channel 4 slashed the budget on content. It did not, incidentally, slash the budget on employment expenditure, which actually went up—all the money came out of content spend. It is difficult to see how that it is going to be able to return to a position of spending the amount that it was previously. Yes, Channel 4 has been supporting independent producers, although the figure that was quoted of support for more than 300 independent producers is not actually correct. The annual report shows that 161 production companies have been supported that actually meet the definition of indies.

Yes, Channel 4 has moved its headquarters to Leeds—against great resistance—and the hon. Member for Leeds North West (Alex Sobel) is right to celebrate the fact that he has a new building there, but it is worth bearing in mind that Channel 4 still has a very large and expensive building about 100 yards from where we are today. Therefore, if it is properly committed in that regard, there is a case for it to move more employees and to do more outside London.

There is a question whether private ownership might result in greater investment. I was surprised to hear from my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) that he questions whether it is possible to fulfil public policy purposes and to satisfy shareholders. He will know that any number of utility companies are doing exactly that. I point to examples such as the telecommunications companies, the electricity companies and the gas companies.