Government drops plans to privatise Channel 4: What you need to know

The Government has scrapped plans to privatise Channel 4 with an “ambitious package of measures” to serve as an alternative to the sale.

Former culture secretary Nadine Dorries spearheaded the proposal to take the broadcaster out of public ownership during Boris Johnson’s premiership.

But her successor Michelle Donelan confirmed on Thursday that the process has been halted following discussions with Channel 4 and the independent production sector.

Here are answers to some of the key questions about the issue:

– Why did the Government want to privatise the broadcaster?

The Government previously argued Channel 4’s long-term future needed to be secured amid concerns for its survival in the streaming era.

A statement by the Department for Digital, Culture, Media & Sport (DCMS) said it had made the decision to allow the channel to “thrive in the face of a rapidly-changing media landscape”, while a Government source said the move would “remove Channel 4’s straitjacket”.

Ms Dorries added in a tweet that she wanted the broadcaster to remain a “cherished place in British life”, but felt Government ownership was “holding Channel 4 back from competing against streaming giants like Netflix and Amazon”.

The Government also argued a sale could allow the channel, which has limited ability to borrow money or raise private sector capital to invest in new platforms and products and cannot own and sell its own content, to establish its own production house and generate its own intellectual property.

– What is the current model?

Channel 4, which was founded in 1982 to deliver to under-served audiences, is currently owned by the Government.

It receives its funding from advertising, not from the taxpayer.

Unlike other broadcasters, everything it airs is commissioned from external production companies.

– What is Channel 4’s alternative plan to privatisation?

The newly-announced alternative package includes reforms through the Media Bill which will allow Channel 4 to make and own some of its content and a new statutory duty on the board to “protect” the long-term financial sustainability of the business.

The broadcaster has also committed to increasing roles outside London and providing more opportunities for people from across the UK to gain experience in the sector as part of the package, the DCMS announced.

In a statement, Ms Donelan said: “This announcement will bring huge opportunities across the UK with Channel 4’s commitment to double their skills investment to £10 million and double the number of jobs outside of London.

“The package will also safeguard the future of our world leading independent production sector. We will work closely with them to add new protections such as increasing the amount of content C4C must commission from independent producers.”

– How have key players reacted?

Channel 4 welcomed the Government’s decision and said it would provide a “firm basis” for the broadcaster to establish a sustainable direction “safely in the hands of the British people”.

It added: “Its decision allows us to do even more to support creative jobs and skills across the UK, to inspire and develop the UK’s world-leading creative industries, and to continue opening up the sector for those aspiring to a career in TV and film.”

Channel 4’s chief executive Alex Mahon said the decision would allow the broadcaster to be “even more of a power in the digital world”.

However, the conclusion was not welcomed by all, with Ms Dorries launching a bitter attack on the Prime Minister after the plans were leaked on Wednesday.

The Tory MP accused Rishi Sunak of U-turning or abandoning key parts of Mr Johnson’s agenda, as she warned it would now be “almost impossible to face the electorate” at the next general election.

Meanwhile, Labour’s shadow culture secretary Lucy Powell said: “The Conservatives’ vendetta against Channel 4 was always wrong for Britain, growth in our creative economy and a complete waste of everyone’s time.

“Our broadcasting and creative industries lead the world, yet this Government has hamstrung them with this total distraction.”

– What have critics of the proposed privatisation previously said?

The Thick Of It creator Armando Iannucci previously tweeted: “They asked for ‘a debate’; 90% of submissions in that debate said it was a bad idea. But still they go ahead. Why do they want to make the UK’s great TV industry worse? Why? It makes no business, economic or even patriotic sense.”

The writer of It’s A Sin, Russell T Davies, said privatising Channel 4 would be a “great crime” that would result in programmes like his hit series not being made.

Tory MP Sir Peter Bottomley said beforehand that he opposed the privatisation as it would be “bad for the diversity of television, bad for viewers and bad for independent producers”.

Philippa Childs, head of the Broadcasting, Entertainment, Communications and Theatre Union (Bectu), described the proposed move as a “short-sighted sale of an incredible UK asset”.

– What have proponents of the sale previously said?

Baron Grade of Yarmouth, who was the channel’s chief executive between 1988 and 1997, said “the status quo is not an option” and that its current remit is like a “straitjacket” in today’s media landscape.

He told the House of Lords Communications and Digital Committee last October: “Channel 4 needs to do what every other free-to-air advertiser-supported business is doing, which is to own its own IP and to be able to gain scale.

“Everything in the Channel 4 constitution presently is against that and therefore it will, in my view, in a very short time really begin to struggle.”

– Who could have bought Channel 4?

Foreign ownership was reportedly considered, as long as media watchdog Ofcom’s “fit and proper” test for ownership was passed.

The Telegraph reported that ITV was at one time interested, while Discovery held informal talks and Rupert Murdoch had been linked to a possible takeover. Bids from Sky, Channel 5 owner Paramount, Amazon and Netflix were also possible.

– How much could it have been sold for?

No price tag was officially set by the Government but reports suggested the channel could be sold for as much as £1 billion.

Ministers previously said they would seek to reinvest the proceeds into the creative industries.