Channel 4: Privatisation (Communications Committee Report)

Lord Gordon of Strathblane Excerpts

Tuesday 17th October 2017 Lords Chamber

[Lord Gordon of Strathblane (Lab)]

My Lords, what a delight it is to follow the noble Lord, Lord Holmes of Richmond. I regret that my enthusiasm for Channel 4 dates from slightly later in my career. I was no longer a teenager, I am afraid, but well into my thirties. Indeed, I recall speaking at a radio and television conference in Monte Carlo, trying to make the argument that Channel 4 was not a threat to radio advertising. But I agree with the noble Lord’s enthusiasm for the report produced by the noble Lord, Lord Best, and his committee. They have done a great and very thorough job. I am also very glad that the Secretary of State, in her letter to the noble Lord, Lord Best, said the Government were convinced that,

“Channel 4’s public service model and remit, which are so vital to the continued strength of the UK’s broadcasting ecology, would not be best served by privatisation”.

For me, it is really quite simple. It has nothing to do with wicked capitalists or anything else. It is a simple statement of fact. If Channel 4 was privatised, you would have to service the capital involved, either by paying dividends or paying interest on bank loans. By definition, that money would come out of the pot that would otherwise be spent on programmes. Therefore, in my view, it is a bad idea. Logically, I cannot exclude the possibility of Channel 4 being acquired by a benevolent philanthropist who wants to lose money on it for the sake of having influence. That, I suggest, is not a particularly desirable solution. We do not want people wanting their influence spread throughout one of our public service broadcasters. It would also leave you with a great problem as regards the succession.

I was impressed by the committee’s observation that it felt that Channel 4’s current model was robust enough to survive to the end of the current licence period. Here I take slight issue with the noble Lord, Lord Birt. Actually, Channel 4 was quite smartly out of the blocks on digital, faster than a lot of other broadcasters. It has an 11% audience share and a 20% share of ad revenue. Quite early on—in fact, I think it was the first to do it—it started to sign up viewers as registered supporters of Channel 4. That number has now grown to 15 million. As the noble Lord, Lord Best, said, the remarkable figure is that one in every two adults aged 15 to 34 has signed up to Channel 4. I fully foresee political parties raiding Channel 4’s staff because this is something that most people would give their eye teeth to achieve.

The idea of moving Channel 4 is pretty ludicrous in terms of moving the entire staff. Most people already concede that you would have to leave the sales force behind, which is roughly a third. You could make quite a credible argument that the people dealing with Parliament should be left in London—either that or Parliament maybe moves to wherever Channel 4 is going—but logically the two should be together if you want an efficient operation. The same is also true of corporate governance. So you end up with very few people actually free to be moved. For that reason, the comparison with the BBC and Salford is pretty misleading. As the noble Lord, Lord Best, pointed out, BBC staffing is 25 times the size of Channel 4’s. The number of BBC staff in Salford alone is four times that of the entire non-sales force staffing of Channel 4. What was a small disruption for the BBC could be cataclysmic for Channel 4.

In this regard I will quote from the Enders Analysis report. I understand that Enders Analysis also advised the committee in quite a lot of its findings. It makes the point that, at best, the cost of the relocation packages for staff would be close to £35 million, and you would have to give Channel 4 the opportunity to recoup that amount by extending the licence to 2030 or 2034. But even if it recouped the amount, there would still be money being spent on relocation costs for staff that could be spent on programming.

The tragedy is that once people are in London, it is very difficult, for very obvious human reasons, to get them to move, because nowadays if people are a couple, both of them are in jobs. The chances of both of them getting a job simultaneously in the same region outside London are, frankly, next to zero. The number of people who refuse to move is really quite surprising. Some 62% of the people the BBC tried to get to move to Salford refused to go; 90% of Office for National Statistics staff refused to move to Newport. These are huge costs. The conclusion of Enders Analysis is, quite simply:

“If the commissioning layer were to be impaired by the exodus of talent, Channel 4 would effectively cease to be”.


It is as serious as that.

I agree with the point made by the noble Lord, Lord Best, that you are dealing with commissioners here—not people who are making programmes but people who are commissioning programmes—and where they are located does not matter a whit. They could be in Land’s End commissioning programmes in John o’Groats, or vice versa. The money, energy and creative talent are generated where the programmes are made, not where they are commissioned.

In conclusion, I would leave Channel 4 pretty well where and as it is. I understand the observations made about children’s television. I point out simply that it is not that children’s television is not attractive to advertising, it is that politicians, including ourselves, have said that they cannot have any. Confectionery manufacturers would gladly advertise to children if we allowed them to. We have not yet squared that circle. We have to find a way of advertising to children that somehow is acceptable, if we want children’s programmes to be financed by advertising; otherwise, we have to find an alternative method of financing it. All in all, Channel 4 has kick-started the revolution in this country that has created such a vast and thriving independent production sector. While it is attractive to media commentators—and, I am afraid, occasionally to politicians—to uproot the plant regularly to see if it is still healthy, there is a lot to be said for leaving things as they are and letting Channel 4 continue to prosper.