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House of Lords report hits out at government’s handling of Channel 4 plans

The House of Lords has criticised the UK government’s approach to deciding the future of commercially funded public broadcaster Channel 4.

John McVay

The upper legislative chamber’s The Future of Channel 4 report, which was published on Friday, censures ministers for not waiting to consult on the future of the broadcaster, and for declaring privatisation their preferred option, until after setting out a vision for public service broadcasting.

“The government should instead start by establishing our ambitions for Channel 4 before considering how best they can be realised,” the report said.

However, the committee was also “surprised” that in both written and oral evidence when asked to describe any potential benefits of privatisation alongside potential risks, Channel 4 corporation “described only risks.”

“Channel 4’s response listed only potential disadvantages. We would have been more reassured to see Channel 4, as a publicly owned corporation, openly demonstrate that the potential benefits of privatisation had been considered by its board,” the report said.

The report, from the House of Lords’ Communications and Digital Committee, comes two weeks after it was announced a decision on the future of the Great British Bake Off broadcaster had been delayed amid growing opposition.

Nadine Dorries (photo: Chris McAndrew via CC)

But despite the backlash from the UK independent production sector and others, the UK government, which has appointed JP Morgan to provide corporate finance advice on the possible change in ownership, believes that a sale is the best way for the broadcaster to compete with US streamers.

The report went on to say privatisation could give C4 greater access to capital and the international market and increase investment in programming. It also said the interests of large, established production companies should not take precedence over the channel’s sustainability.

John McVay, CEO of UK producers’ association Pact, said the inquiry “wrongly assumes” that the UK’s terms of trade (which allow producers to keep hold of the rights to their programmes) are “too restrictive” and doesn’t propose a viable or fair alternative to privatisation.

McVay added: “We are concerned that the supposed alternative – the recommendation that government allows Channel 4 to own more IP and an amendment to the indie quota – will go against the delicately balanced ecosystem that currently exists within the UK broadcasting system.

“Ofcom’s recent report on the future of public service media found that there were risks associated with changing the indie quota definition and believes that it will continue to be important in future regulation.

“It is also not clear what the Lords mean by changing the terms of trade and we fear that the committee may misunderstand the nature of the terms of trade, which are not restrictive, are always changing and have stood the test of time due to their flexibility.

“A drastic change to the terms of trade could revert a hugely successful indie sector to the work-for-hire cottage industry it was before the introduction of the terms of trade, losing the creativity and diversity of ideas that it is known for.”

Several potential buyers, including ITV, Comcast-owned Sky, Discovery – which is set to merge with fellow US media giant WarnerMedia – and ViacomCBS are all reportedly interested in C4.

Last week Nadine Dorries, the UK’s secretary of state for Digital, Culture, Media and Sport, appeared before a parliamentary select committee to discuss her brief, and falsely claimed that Channel 4 was in receipt of public money.

Channel 4 is a public service broadcaster in the UK, established by an act of parliament in 1980, but unlike the BBC is funded by its advertising and commercial revenues and not by public money or a licence fee.

Nevertheless, Dorries said: “It’s right that a public service broadcaster, in the rapidly changing digital environment that we’re in at the moment, I think the longevity and the future of that broadcaster should be brought into question and should be, particularly when it’s in receipt of tax payers’ money. It is our responsibility to evaluate whether tax payers are receiving value for money and whether that model is sustainable in the future. It’s absolutely right and proper that we should do so and that is the process we’re going through.

“I would argue that to say that just because Channel 4 has been established as a public service broadcaster and just because it’s in receipt of public money, we should never, kind of, audit the future of Channel 4 and evaluate what Channel 4 looks like in the future and whether it’s a viable and sustainable model. It’s quite right the government should do that.”

When it was pointed out to Dorries by culture select committee member Damien Green that Channel 4 is not in receipt of public money, she added: “And… so, although it’s… yeah… and that.”


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