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5 April 2022

Government to press ahead with Channel 4 sale

Privatisation is going to be hard to be square with the levelling up agenda.

By Freddie Hayward

The government has announced it will press ahead with plans to privatise Channel 4. Nadine Dorries, the Culture Secretary, said that public ownership was preventing the broadcaster from competing with streaming giants such as Amazon.

The government also hopes that the move will allow the company to diversify away from traditional advertising revenue. “It’s pure business if I’m honest,” one government source told me, adding that the broadcaster was now probably at its “maximum value”. Dorries will publish the proposals in due course and the government is said to want to finalise the privatisation before 2024. That’s a long way off, and the necessary bill will probably face strong opposition in parliament.

If it did pass, the key question would be who the buyer would be. They would have to balance the need to turn a profit with the requirement for public service broadcasters to fund current affairs programmes and news. (Expect the government to try to make public service broadcasting more attractive to private investors in an upcoming media bill.) In 2016, when privatisation was last mooted, the American media conglomerate Discovery was the leading contender. A source confirmed this time that there would be “various discussions in the US and in the UK”, raising the prospect of another national asset being sold to a foreign entity.

It’s a point Labour has picked up on. Lucy Powell, the shadow culture secretary, said selling Channel 4 “to what is likely to be a foreign company makes absolutely no sense”. The sale, she added, would “cost jobs and opportunities in the north and Yorkshire, and hit the wider British creative economy”.

That’s the other key question: how does privatisation square with the government’s levelling up agenda? Channel 4 recently opened an office in Leeds and has creative hubs in Glasgow and Bristol. Its commissioning budget helps to fund Britain’s independent film and TV industry, with two thirds of its main channel commissions produced outside of London. Indeed, a report last year predicted that privatisation could lead to a 14 per cent decrease in jobs supported by Channel 4 across the UK.

Dorries has said that some of the proceeds from the sale would be directed to the film and TV sector to compensate for any lost investment, but this appears to be a one-off payment, not comparable to the long-standing partnership between Channel 4 and the independent sector. The decision suggests the government’s commitment to free markets is coming into conflict with its vague ambition to level up the country — or perhaps the Tories have always wanted to make levelling up more about private industry and less about state investment than most people assumed.

This piece first appeared in the Morning Call newsletter; subscribe here.

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