February 8, 2023

Channel 4 is in talks with the government about new financing models that can prevent privatization, according to the culture secretary.

Plans to sell the state channel are expected to be abandoned, although ministers officially say they are still considering all options.

Michelle Donelan, who took over as culture secretary in September, told MPs she was discussing alternative business models with the broadcaster: “I have looked at other sustainability options and discussed with Channel 4 how feasible they are. If we go down one of those avenues, we need them to fully opt in and agree to it.

This could open the door to a face-saving compromise that would involve changes to Channel 4’s funding model, while also avoiding the risk of a tough parliamentary battle over a full sale of the broadcaster to a commercial rival.

Earlier this year, Channel 4 put forward an alternative proposal that would see it sell its London headquarters for up to £100 million and move staff to the north of England, while reaching a global audience by making its streaming service available around the world . This idea was rejected by Nadine Dorries, the former Minister of Culture, who insisted that privatization was the only realistic option.

Channel 4 has been owned by the state since its establishment in 1982, but is operated on a commercial basis. It reinvests all of its profits into new program creation, but remains heavily dependent on revenue from sales of traditional television advertising.

Donelan told MPs on the digital, sports and media committee that she acknowledged there are long-term concerns about Channel 4’s business model: “Their growth on All 4 is similar to Netflix and Amazon Prime – the problem was more in the long-term potential because a large part of their business model is based on linear advertising.”

Boris Johnson’s government had pushed the privatization of Channel 4 despite – or, according to some MPs, because they welcomed – strong opposition from the UK media industry. However, they faced unexpectedly strong opposition from backward Tory MPs who expressed concern that it would harm manufacturing companies in their constituencies.

Donelan told the culture selection committee that the government would still come up with new media legislation – most of which is welcomed by other broadcasters – as her department tackles a backlog of legislation related to issues such as online harm, football regulation and gambling.

She also said that unlike Nadine Dorries, her predecessor as culture secretary, she does not make any connection between political concerns about the BBC’s impartiality and the future of the license fee.

“That [impartiality] has nothing to do with the funding model and how we make the BBC sustainable,” she said, taking a more positive note of the BBC’s reporting.

However, she cautioned that the dwindling number of people paying for the BBC suggests a new funding model is needed: “The license fee in itself is not a long-term sustainable model. If we want to make the BBC sustainable, we have to be honest. I want to work constructively with the BBC on that.”

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