Channel 4 Privatisation

Peter Bottomley Excerpts

Tuesday 14th June 2022 Commons Chamber

[Sir Peter Bottomley (Worthing West) (Con)]

It is interesting to follow the hon. Member for Ochil and South Perthshire (John Nicolson). I do not think he needed to bring in party politics in the way that he did. I do not think that will help Channel 4, and I do not think it will help him either. What I do think is that, if the arguments put forward for the privatisation of Channel 4 were any good, they would have been put forward by Channel 4. If I were Secretary of State, I would say, “Ask Channel 4 to ask for privatisation as and when they think it will help them as a public service broadcaster.” It has not.

I ask the Government: when was the last time Channel 4 used public money for programmes? When did it last ask to have its borrowing limit lifted? It has not. I ask the Secretary of State whether she could have put in what she said. How much has Channel 4’s income from digital advertising increased in the last year and how much does Channel 4 expect it to rise in the next four years? We know that subscription on demand has grown and that broadcasting on demand has grown, mainly through Channel 4, but others can do the same, and we expect growth in advertising on video on demand. What we do not need to do is to throw away one of our best linear broadcasters which is also good at digital transformation.

Nothing has been said by Government, or even Government supporters, that suggests that Channel 4 would do better in other hands. The only conceivable ownership that would keep it going the way it is now is if it were given to the independent production companies to own as a mutual, and kept the broadcaster role and the rights on secondary broadcasting. That is a zero-sum game. Either the income stays with the producers or it goes to the broadcaster—it cannot go to both. If the Government think it would help the producers to take away that secondary income, they are just saying, “We are going to take it from one pocket and put it in another.” No argument has been put forward for that.

Have the advertisers said that they want this for Channel 4? No. The Incorporated Society of British Advertisers has said very clearly that it does not want that. There is also no evidence from polls or the Government survey and consultation that the viewers want its ownership or remit changed. The Government say that they are going to keep the whole public service remit, but they are not.

Channel 4 has been going—successfully—for 40 years. It has its ups and downs, but generally it is on the way up. The transformation in the way it produces and presents its products has gone on improving choices for people.

We have more than three different types of public service broadcasters. The Government are proposing to abolish one of them. That is not conservative; it is destructive. I do not blame the Secretary of State for thinking up the idea; it was there before she took on her responsibilities. But she could have done what other Secretaries of State have done and stood up to those who want to privatise Channel 4. My wife did. She was in a small minority in the Cabinet. She stood up against it. Her arguments were right. When the Chancellor said, “We want to get some money in, because we are short of money,” she explained that it was not a question of how much; it was just wrong. In the years since the mid-1990s—that is about 27 years—Channel 4 has gone from strength to strength.

I say to the Government: do not go on with this, although not because I do not like privatisation—I do. The privatisation of the National Freight Corporation—incidentally, that was the only bit of privatisation in the 1979 manifesto on which Margaret Thatcher and I got elected—was to hand the National Freight Corporation to its employees and that worked really well, but that is not the proposal here.

Government speakers say that the proposal will give Channel 4 more money to put into training people. We do not need to privatise an organisation to do that. They say that it will provide more money for commissioning programmes. Maybe it would in the short term, but not in the long term. What is the medium-term and long-term gain? The answer has not been put forward.

I do not seriously believe that the Secretary of State or her colleagues mind being criticised by Channel 4 News—by criticism, I mean being asked to answer questions. That is the sort of thing that happens in the House of Commons and they do not try to abolish the House of Commons because we ask awkward questions. But as I have said, it is far better to be in government and to have to answer awkward questions than to be in opposition and cheer when the interviewer puts the awkward questions to the Labour party or whatever else might be the alternative Government.

I ask the Secretary of State and the Government to think again, to leave the proposals for Channel 4 to rest and to say to Channel 4’s viewers, management and board, “If and when you believe that we can do better under a different kind of ownership, come forward and say so.” One of the many groups that have not done that is those involved in Channel 4.

Those who are concerned more for the producers of programmes than for the viewers put the arguments well around the nations of this country. I do so on behalf of the public interest. If the choice is between the state owning Channel 4 and the United States owning Channel 4, it is better to have it as a state corporation, independent of Government. I wish Government would stop messing it around.

--- Later in debate ---

[Ben Everitt (Milton Keynes North) (Con)]

I am sure we can all agree that the diversity and range of broadcasting here in the UK is a hallmark of a free and democratic society. Indeed, television is one of our most popular exports, and a huge source of soft power. We project Britain, and our ideals, through billions of TV screens around the world. I am a ’70s baby, early ’80s child. I was about eight when my parents first got a television, and I was absolutely glued to it, so Channel 4 really has been part of my life growing up. Indeed, people remember the excitement of acquiring the fifth channel.

Channel 4 is a modern, forward-thinking broadcaster providing millions of customers with unique content while, as we have heard, supporting and promoting the independent production sector. I reflected this morning on what Channel 4 shows I have enjoyed watching. I realised that aside from “Humans”, all the others are from about 20 years ago—“Brass Eye”, “Spaced”, “The IT Crowd”, “Father Ted” and so on. Plenty of shows produced by Channel 4 subsequently have pushed the boundaries of broadcasting, even if I have not watched them. I am told that one of them is called “Naked Attraction”. These shows, and many more, illustrate the vast range and depth of the creative talent at Channel 4. Importantly, the Government are keen to maintain and foster that in future, which is why they are taking action.

The media and television landscape has changed dramatically over the past decade, with the rise of subscription streaming services such as Netflix, Disney+ and Prime Video, all of which have been mentioned. They demonstrate the shift in the landscape. We can now access content through a range of devices at any time, wherever we are. We need to adapt. The world is changing and there is a new landscape, so public service providers must evolve. We have an increasingly competitive market. No Government can fully give powers to any company to adapt to this. Government ownership, in the context of that competitive market shift, is holding Channel 4 back from being able to adapt to the new state of play. Adapting, in the case of Channel 4, means diversifying and broadening revenue streams. It means having unrestricted freedom to create and produce its own content, fully utilising the creative talent that it is known for across the country.

These significant structural changes require investment —lots of it—and speed of delivery. That scale of change is best achieved through private ownership. During these testing times for many throughout this nation, it is not fair to ask the taxpayer to bear the burden of any resulting risks. More broadly, these challenges are linked to the Government’s levelling-up strategy. We want to empower the UK’s creative industries, wherever they are across our nation, by investing in independent production and creative skills, creating more jobs and opportunities for everyone. I welcome the fact that the Government seek to use the proceeds from the sale of Channel 4 to enable that investment.

The media Bill will empower Channel 4 by enabling it to pursue and track its own creative direction, bolstering the UK’s public service broadcasting sector. If we increase competitiveness, we drive growth and prosperity across our nation—something I am sure we can all agree, across this House, is a desirable outcome. Clearly—this will not be a shock—I am not on the side of the doom-mongers and the pessimists, or, as others call them, the Opposition. We heard a blast from the past earlier with all the stuff about big American companies coming over to take our assets. It is Corbynism again—Corbynism in an Islington lawyer suit. Channel 4 has a bright future. It has the capacity and the tools to succeed without the constraints of public ownership.

[Sir Peter Bottomley]

I have been listening to my hon. Friend with interest. How is Channel 4’s future brighter when it stands by itself if it is sold to a competitor? What is the gain?

[Ben Everitt]

I welcome the intervention. The gain is that the risk is not with the taxpayer; Channel 4 would be unburdening the taxpayer from the risk of future borrowing.

Channel 4 does have a bright future. It is a successful broadcaster in its own right, and it can stand on its own feet, but the risk of borrowing against the taxpayer is not something that the Government want to get into. Ultimately, for Channel 4 to flourish, the Government must step out of the way.

--- Later in debate ---

[Julia Lopez]

I can account for what the Secretary of State and I have done within our roles, and I think we have pushed forward an extremely ambitious set of reforms in the short time we have been in DCMS. This is an exciting time to be in public service broadcasting. I always thank the hon. Gentleman for his contributions because I know he has expertise in this field.

It is this Government and this Secretary of State who have decided to act, bringing forward a comprehensive package of reforms to support our PSBs through the first broadcasting White Paper in 20 years. It is the next step in a long history of support for our creative industries. It was a Conservative Government—under Margaret Thatcher, no less—that established Channel 4 in the 1980s to stimulate independent production and distinctive content. It has worked, and then some. It was a Conservative Government that encouraged Channel 4’s move to Leeds to spread the benefits of the creative sector beyond London. It worked. And it is a Conservative Government that are tackling the limitations of Channel 4’s ownership structure in this new broadcasting landscape, redirecting sale proceeds into a creative dividend to address the skills challenges of now.

Let me just touch on those limitations, because it is important to remind the House of them. Channel 4 is a fantastic broadcaster that has great management, innovative programming, high quality journalism and a diverse audience, but it is uniquely challenged in two ways. First, the publisher-broadcaster restriction means that it cannot own its intellectual property, so it finds itself reliant for 74% of its income on linear TV advertising revenues. Such revenues have fallen 31% sector-wide between 2015 and 2020, and that trend is set to accelerate as audiences move online and change their viewing habits.

[Sir Peter Bottomley]

Are those the most recent figures that the Department has? Many of us have been asking Channel 4 what its revenues were in the year that finished last year, and the growth in its digital advertising might also be something that the Minister would like to share with the House.

[Julia Lopez]

We would be very keen to get more information on Channel 4’s business at the moment, as it has been rather difficult to extract.

Secondly, should Channel 4 need to borrow money to keep up with the content investment of rivals, that borrowing would sit on the public balance sheet. In the light of those fundamentals, we are not going to apologise for asking the serious and responsible question as to whether this ownership model and structure is the right one for today’s broadcast challenges. That is something that the Secretary of State outlined today, and it has been expertly set out by my right hon. Friend the Member for Maldon (Mr Whittingdale).

I understand why hon. and right hon. Members want reassurance on this plan, and I want to provide it, but before I turn to some of the points raised this afternoon, I want to tackle some of the outlandish assertions in the article by the hon. Member for Manchester Central in The Yorkshire Post today. She claims that our selling Channel 4 could

“kill off independent film production”.

Let us set aside the fact that we believe any new owner would want to maintain Film4, for all the reasons she cites on its value. She completely underplays the strength and depth of the UK’s booming film industry, ignoring all the other players who support it, including the British Film Institute, with its own film fund, the UK Global Screen Fund, into which the Government channel £21 million to promote and distribute UK film around the world, and the fact that our film sector is doing so well that it cannot keep up with the demand for skills and studios.

The hon. Lady says that the sale of Channel 4 will lead to the move of more jobs back to London. I remind her that the BBC has committed to increasing its spend across the UK, that non-London production spend will remain in Channel 4’s remit and that ITV, Sky and Channel 5 all have large operations beyond the capital. There are so many centres of excellence outside London in our production sector that there are huge incentives to keep investing in our regions. She goes on to denigrate channels that are motivated by what she appears to see as a dirty word, profit, over public service. I wonder if she understands that those two things are not mutually exclusive. ITV and Channel 5 are all privately owned public service broadcasters. Indeed, since Channel 5’s sale to Viacom, it has gone from strength to strength, producing some fantastic, distinctly British content. As detailed in the White Paper, she will also understand that Channel 4 will remain a public service broadcaster, with quotas for independent production and the remit protected. We believe that getting private capital into the organisation will allow it to commission more, not less.

I now turn to the contributions of others. My hon. Friend the Member for Folkestone and Hythe (Damian Collins) made the excellent point that Channel 4 itself has suggested a joint venture as a way forward, which would change the relationship with the independent production sector. Implicit in that is that the status quo cannot hold because of the changing dynamic of the market—the strong headwinds he cited—with the shift to online, inflation in production costs and so on.

The hon. Member for Ochil and South Perthshire (John Nicolson), in his waspish speech, suggested that we are trying to make Channel 4 like Netflix or Amazon. That is not the case. We are saying that those businesses are changing the market, and we need to equip Channel 4 to deal with that.

The Father of the House, my hon. Friend the Member for Worthing West (Sir Peter Bottomley), suggested that we the taxpayers, as owners, should listen only to Channel 4 on whether it wants to change. I refer him to the absolutely fascinating contributions from panellists to the Lords Communications and Digital Committee inquiry on the licence fee, and the challenge they cited about small-c conservatism in media organisations.

My hon. Friend the Member for Aberconwy (Robin Millar) touched on this in his superb speech, including on the reticence we often find in organisations about changing and trying to come to terms with some of the challenges they face. I think there is an urgency to this debate on sustainability that we are taking on. He also mentioned Channel 4’s vulnerability to shocks because of its structure.

I enjoyed the speech of the hon. Member for Cardiff West (Kevin Brennan). It was fun, but it was a wholly inaccurate artistic interpretation of the advice of officials who have provided extensive analysis of some of the market dynamics that they think provide a real challenge here. Incidentally, I sometimes find myself imagining alternative scenes in the Opposition offices, with the shadow Secretary of State saying, “Do you know that Channel 4 is the only broadcaster capable of keeping the film, TV and creative industries and the regions going, and also producing content that audiences actually like?”

The Chairman of the Select Committee, my hon. Friend the Member for Solihull (Julian Knight), recognised the importance of getting private sector capital into the business to allow it to grow. I assure him that we want Channel 4 to continue to produce news. It is part of a genuine suite of support for the creative economy. The hon. Member for Luton South (Rachel Hopkins) reduced these critical media reforms to a “petty vendetta”, and I can assure her that that is not the case. Channel 4’s sale is part of a package of media reforms that the sector has asked for.

As my right hon. Friend the Member for Maldon pointed out, it is in our interests to see Channel 4 thrive. It is because of those interests that we want to drive these reforms, and we believe that Channel 4, in thriving, can invest more in content. He talked about the cut in content spend that we have seen over the last year or so, and he also highlighted the superb Lords report. My hon. Friend the Member for Folkestone and Hythe gave an important account of the trends in play and the need for a radical reset of Channel 4’s role.

The hon. Member for Canterbury (Rosie Duffield) talked about the independent producers, and I want to reassure her that we also value the distinctive content and see that as part of the sale process. I also want to assure my right hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) that we have digested the consultation responses fully. We put a lot of departmental resource into doing that.

In so far as there is any ideological drive, I was interested in the challenge from my hon. Friend the Member for Mansfield (Ben Bradley)—a deeply unfashionable view in this House, it seems, too often—that private sector capital going into a business is a good thing because it can grow businesses, create jobs and drive innovation. Fundamentally, it can also provide content of the kind that audiences—too little discussed, I think, in this debate—love.

The right buyer for Channel 4 will be one that shares our ambition for the business and our belief in what makes it special. As I say, I note the concerns of the hon. Member for Canterbury about its distinctive content. I want to assure her that we are not trying to change the distinctive role Channel 4 plays; we are seeking to give it the best set of tools and the freedom to flourish and thrive long into the future. That is why the Government will move ahead with plans to move Channel 4 out of public ownership to become a free-to-air, privately-owned public service broadcaster.

The Government today have been accused of cultural vandalism, including by the hon. Member for Warrington North (Charlotte Nichols). Let me say that the greatest act of cultural vandalism would be to let our public service broadcasters wither on the vine due to the small-c conservatism of the Opposition or an attitude that there is nothing to see here for our PSBs, particularly given the jobs and the values at stake. We want our public service broadcasters to have a long-term future and, through our media Bill and our broadcasting White Paper, we have the plan to deliver just that.

Question put and agreed to.

Resolved,

That this House supports the UK’s much loved cultural institutions, which are celebrated around the world while creating jobs and growth across the country; in the Jubilee year supports world-renowned British broadcasting which brings the country together in celebration; believes that the Government should reverse its decision to sell Channel 4 as it will undermine the UK’s world leading creative industries and the delicate ecosystem of companies that support them; and calls on the Government to ensure that, if the sale does go ahead, Channel 4’s headquarters continue to be based in Leeds and its remit ensures that it continues as a public service publisher-broadcaster, commissions over 50 per cent of its content outside London, continues its significant investment in new independent British films and funds quality news content which is aired at prime time.