Channel 4: Privatisation (Communications Committee Report)

Lord Sherbourne of Didsbury Excerpts

Tuesday 17th October 2017 Lords Chamber

[Lord Sherbourne of Didsbury (Con)]

My Lords, I was a member of the Communications Committee which produced this report in July last year. I begin by paying tribute to the chairmanship of the noble Lord, Lord Best. I was on the committee for the three years when he was chairman, and one could not have wished for a more effective chairman. He always managed to achieve in our reports that often elusive combination of consensus and clarity. He has also achieved something else rather remarkable—namely, the Government have agreed, and acted on, the recommendations of our report. I commend the noble Lord, Lord Best, and the committee for that.

At the heart of this debate is the following question: what is the point of Channel 4? What is its distinctive role in UK broadcasting? The statutes and licensing agreements that govern Channel 4 are set out in our report. There is the Communications Act 2003 in Appendix 4; the Digital Economy Act 2010 in Appendix 5; Channel 4’s licence agreement in Appendix 6; and there are the public service broadcasting obligations set out in the Communications Act 2003 in Appendix 7. If one reads these, one can become very glazed-eyed. But help is at hand, because the chair of Channel 4, in his annual report, has summarised admirably and crisply Channel 4’s obligations as being,

“to innovate, challenge and inspire, to stimulate debate and open the door to opportunities for the stars of tomorrow”.

The issues in my mind, therefore, are as follows. Does Channel 4 have the right business model to achieve its remit? Is it being effectively assessed? To what extent is it meeting its remit, and where could it do better? Finally, should it be privatised?

First, on the business model, last year revenues rose to almost £1 billion, the highest ever. Of course, there must be a question mark over future advertising revenue, but that would be true of any commercial organisation, not just Channel 4, and there has been a strong performance in sales and digital revenues. Channel 4 has a strong balance sheet and reserves. Would privatisation help it to do any better? The evidence given to the committee on this point was mixed, but the view that we came to was that a change of ownership of Channel 4 would put at risk the remit of the channel.

This brings me to the next question: how accountable is Channel 4 and is it being assessed effectively? Some of the obligations—the quantitative ones—are obviously easier to measure. The qualitative ones were seen as inevitably fuzzier. However, Ofcom told the committee that it could,

“live with a degree of fuzziness,”

because, as it said, the quality of broadcasting cannot be easily measured.

The next question is whether Channel 4 is achieving its remit. Our broad view was that, yes, it was. It is worth highlighting as an example of this—as was mentioned by the noble Lord—the wonderful Channel 4 broadcast of Rio’s 2016 Paralympics. This was its largest ever international broadcast, which increased still further the public’s interest in, and support for, these games—and all in Channel 4’s Year of Disability.

Could Channel 4 do better? We received evidence from the then Secretary of State and others that the programming for older children and young adults was unsatisfactory. I hope that that has been taken note of.

Finally, I turn to the central question that we addressed: should Channel 4 be privatised? If it were to be privatised, would it be possible to preserve its remit? Both David Abraham, the chief executive, and the noble Lord, Lord Burns, thought that the pursuit of profit would erode the remit. Another witness—this was interesting and important—did not appear at all confident that Ofcom would always require adherence to the remit. The most interesting point that emerged, however, which, from memory, emerged only after a certain amount of delving, was that Ofcom confirmed that it did not have the power to revoke the Channel 4 licence. That would require a change in legislation. So the view that we took was that, in the case of any change of ownership through privatisation or any change in the remit, Ofcom would not have the power to revoke the licence. For all those reasons, our committee concluded that there were more risks than benefits to privatisation. I therefore welcome the Government’s decision that Channel 4 should remain publicly owned.