Channel 4 Privatisation

Robin Millar Excerpts

Tuesday 14th June 2022 Commons Chamber

[Lucy Powell]

I will not give way; I am going to make some progress.

Unlike Netflix, which is seeing the number of its subscribers going down, All 4 is a highly successful free streaming service, generating 1.25 billion views in 2021, with eight out of 10 young people in the UK registered to it. Global streamers produce content to appeal to the widest possible global audience, but Channel 4 produces distinctive and diverse British content that reflects this country’s social and cultural landscape. The Secretary of State’s sell-off will mean less British-made content and representation. Finally, if she wants Channel 4 to be free to compete with the likes of Netflix, Amazon or Disney, why is she offering those companies a chance to buy it?

The Secretary of State also says that the age of linear television is dead and linear advertising is going down with it. However, advertisers are against her plans too, as they know it will mean less choice and less competition without the unique audience reach that Channel 4 currently offers. The big winners will yet again be the likes of YouTube that compete for young audiences and will gobble up the advertising opportunities that disappear from Channel 4.

There are basically two options for a buyer if the Government go ahead: either the channel will be bought by a UK broadcaster such as ITV—and the sale may well not be allowed to go through on competition grounds, as it would lead to over-dominance on advertising, driving up prices up and lowering choice—or, which is more likely, Channel 4 will be bought by one of the big US media giants. In that event, rather than investing in British programmes for British audiences, Channel 4 would become a shop window for the buyer’s existing content. This is a policy that sells off a great British asset to the benefit of the big US tech giants in more advertising revenue and to the big US media giants in economies of scale. That is a great policy, is it not? It is really patriotic; I am not sure why I didn’t think of it myself.

Finally, the Secretary of State says there is no alternative, but she and I both know there is. Channel 4 has set out a proposal that maintains public ownership while delivering even greater public benefit and putting Channel 4 in a stronger financial position. However, she has ignored it, because she is hellbent on selling off the channel because she thinks it is a bit left-wing.

[Robin Millar (Aberconwy) (Con)]

It’s a lot!

[Lucy Powell]

Yes, well, it may be, but I do not think it is. [Interruption.] No, I think the hon. Gentleman has let the mask slip on his own side, because Conservative Members do think Channel 4 is a bit left-wing, which is why they are selling it off.

The truth is that the Secretary of State has misunderstood where Channel 4’s true value comes from and the important distinctive role it plays in the wider economy. That is why Margaret Thatcher invented it, and that is why many Conservative MPs and peers oppose this. The Culture Secretary might not want to hear it, but this is what some Conservatives have to say about her proposal: the “opposite of levelling up,” “very unconservative” and

“an unnecessary and provocative attempt to address a political non-issue during a time of crisis, at significant cost to the independent UK film and TV industry.”

I would say they are as brassed off as the rest of us. [Interruption.] Some Members got that cultural reference.

We know the Culture Secretary does not like Channel 4, and she has said that it does not do itself any favours. Her sell-off has no support in the country, no support in the creative industries, no support from other broadcasters, no support from advertisers and very little support in Parliament. The big winners from her policy will be the big US tech and media companies; the losers will be British creative jobs outside London, British independent film, British independent production companies and Britain’s creative economy.

This cultural vandalism does not get modern Britain and does not understand how best to grow the British economy. That is why I urge the House to support our motion today.

--- Later in debate ---

[Robin Millar (Aberconwy) (Con)]

As so many on these Benches have said, Channel 4 has marked the landscape of our lives. Loved or loathed, the landmarks are all there to see across the broadcasting landscape. For me as a youngster, it was the NFL coverage of Super Bowl on Sunday nights that sticks in my memory. More recently, as an engineer, I enjoyed the prominence and accomplishments of the characters on “The Big Bang Theory”, and there are others that have taken our attention as a nation. Who could forget the cultural contributions of the likes of Homer Simpson, particularly his contribution to the English language of “Doh”? Perhaps I am the first Member in this House to mention that in this place. For the benefit of the hon. Member for Ochil and South Perthshire (John Nicolson), that was a cultural reference.

The motion moved by the Labour party opens with the words:

“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”.

I am sure that those words are unanimously supported by Members across the House. I am proud of this Government’s support for, and recognition of, the immense value of our cultural institutions. After all, it was this Government who opened the £1.6 billion cultural recovery fund, which protected museums, galleries and other cultural treasures from the existential threat that the pandemic presented to much of the UK’s cultural landscape. It was a Conservative Government who saved it.

Let me be clear that I believe the right sale of Channel 4 will help it to thrive in the modern era. Other hon. Members have made that point, so I will not dwell on it. I also believe that a change of ownership can give it access to funds, as other hon. Members have pointed out.

My main point, in answer to several hon. Members who have raised this, is about why a sale is necessary. This is an important point to make because it speaks to how we manage public assets—the buying, holding and exiting of those assets. The word “ideology” has been used several times by Opposition Members. Perhaps this is a gross characterisation—hon. Members will forgive me—but often the Opposition are characterised as being ideologically driven and those of us on the Government side are characterised, or criticised even, as being over-pragmatic. It is interesting to see our actions and words here viewed through an ideological lens. Actually, we are making a pragmatic response.

As a state, we have a poor track record—across all parties and all Governments. We are very good at spotting problems, designing a response and delivering a solution, but then we tend just to hold on. We think that is virtuous, but in fact we risk creating self-perpetuating institutions that become an echo of the past. The real question is not whether this is an ideologically driven or pragmatic response; it is which is the better driver for creativity. I am mindful of bodies such as NatWest, because until two months ago the Government were still the majority shareholder.

What happens when we hold an institution—this has been shown time and again—is that institutional calcification occurs. Inevitably, funds are diverted, with more and more resource going into self-preservation. But the right sale, well managed, would break that up.

[Jesse Norman]

I am enormously grateful to my hon. Friend for his comments, but does he have any evidence that the calcification he talks of is actually happening to Channel 4? There is obviously inflation in the sector. Does he think that Channel 4 is markedly less innovative than other players in the sector? Could he say a bit more about why he thinks privatisation would make a positive difference, given that Channel 4 has managed to flourish over 40 years of state ownership? There are other state organisations, such as the Bank of England, that we would not consider privatising because they have shown their value over many years.

[Robin Millar]

I thank my right hon. Friend, who pre-empts my next comments. Indeed, I will come on to why flourishing is not just measured in finance. For every supply chain that might be disrupted by a sale, a new opportunity for entrants to the sector is created. We have already heard one such example in the intervention from my hon. Friend the Member for Lichfield (Michael Fabricant). Some of the production companies that started with Channel 4 in the early days were cutting-edge start-ups, but now they are becoming institutions in their own right, and we have seen the same pattern—to answer my right hon. Friend’s question —in silicon valley. For agrarians and those who enjoy gardening, sometimes we prune a successful fruit tree in order to encourage further flourishing and production.

After all, Channel 4 has achieved its objective, and this is the point. It was set up by a Conservative Government, under Margaret Thatcher, to create competition in our now thriving independent production sector. Now, having fulfilled this purpose, we are supporting our public service broadcasters to continue to grow, export British content and compete globally. To sell is a responsible question to ask.

By way of further example, about a year ago I spoke to the former chief executive of S4C—Sianel Pedwar Cymru, as we say over the border. It was clear then that S4C was being drawn away from the traditional broadcaster role into more of a media company role, but the funding arrangements in place were hindering that. I see a parallel with the situation facing Channel 4. To be clear, and in response to the hon. Member for Cardiff West (Kevin Brennan), success is not shameful and a sale is not punishment.

In conclusion, the Opposition should not fear change, nor should they resist the responsible management of public assets. It is the responsible thing and it is the right time now to ask the question: what next for Channel 4?

--- Later in debate ---

[Jesse Norman]

The hon. Member makes an interesting and fair point. Of course, if advertising revenue were so unattractive, the rest of the market would not be piling into it. At the same time, no matter who the owner of the enterprise will be, they will not be immune from wider inflation in programming costs. That is the nature of the business, and the question is what innovative and constructive responses will be undertaken by the management team to address that.

The plan is also bad economics from a public standpoint. The House will know that I spent a couple of years as a Treasury Minister, including during the period the Secretary of State talked about when all the support was given to the cultural sector, and I think it is bad economics. Even if the constraints were relaxed in the way that has been described, the revenue to be derived would be only, on a net basis, in the order of £500 million to £1 billion. My successor, the present Chair of the Digital, Culture, Media and Sport Committee, my hon. Friend the Member for Solihull (Julian Knight), has pointed out that that is a drop in the ocean compared with the wider problem. At a 4% interest rate, £500 million amounts to £20 million a year. Are we really going to give up all the control, energy, drive and impetus that exists in Channel 4 now, and the £200 million of directed programming from independent production companies that comes from that, in return for the equivalent of a £20 million annuity? I do not think that makes any economic sense at all.

Overall, this is not a Conservative proposal. What matters in this case is the quality of the ownership. Channel 4 has an independent ownership structure; it happens to be owned by the state, but its ownership structure has made it resilient to political pressure and able to commission highly innovative, risky and interesting forms of programming, for which we celebrate it.

[Robin Millar]

Will my right hon. Friend give way?

[Jesse Norman]

I cannot, as I do not have much time, but I may take my hon. Friend’s intervention later.

It is not a Conservative proposal to sell Channel 4, and even if it was sold now does anyone really think the value generated would not itself be a reflection of the proposed doom scenario in advertising revenues because of the way in which future cash flow works? The key issue here is that we should support an enterprise that itself supports independent production companies, many of them in our nations and regions, that proactively supports disabled people, that supports the Union, and that supports levelling up. That is what Channel 4 does.

I have no doubt that Channel 4 can be further improved and enhanced, and I see its next episode as a down payment on the next generation of its own thinking about how its module could be further leveraged and enhanced, but at the moment it is doing a superb job. We should not sell it; we should proceed and support it in any way we can in the future.