A privatised future for Channel 4? Contents

Summary of conclusions and recommendations

Economic sustainability

1.As C4C’s Annual Report shows, 2015 was a successful year for the broadcaster and this indicates that the issues of economic sustainability of previous years have now been addressed. We are confident that C4C is well-positioned to withstand future market volatility including the impact of the UK’s withdrawal from the EU. (Paragraph 59)

2.The Committee notes C4C’s diversification strategy which indicates that it is well positioned to continue to serve its target demographic across all platforms and to add significant digital revenues. (Paragraph 80)

3.We have seen no evidence that the current C4C model is not sustainable until the end of the licence period. We are not convinced by the argument that C4C is too vulnerable to be allowed to continue as it is. Barring the sort of economic cataclysm that would damage all forms of broadcasting, it seems clear to the Committee that C4C could fulfil its licence requirements at least until the end of its current 10 year term in 2024. (Paragraph 81)

Impact of privatisation on content

4.The Committee recognises that there will never be a regulatory system which can judge cultural quality and cultural significance, objectively and definitively, not least because these attributes can take a long time to become apparent. (Paragraph 99)

5.The Committee notes that no post-legislative scrutiny has been carried out on the Digital Economy Act 2010: such an exercise could consider the success of regulation so far in assessing the quality of C4C’s activities. (Paragraph 100)

6.The Committee is concerned that in the case of a privatisation or part-privatisation the different priorities of the relationship between the public and private entities could lead to operational tensions. (Paragraph 106)

7.Channel 4 News is important because it provides a different reporting style and viewpoint to other public service broadcasters. The Committee considers that there is a significant risk that this genre could be adversely affected by privatisation. (Paragraph 120)

8.The Committee concludes that the current programming for older children and young adults from C4C is unsatisfactory. We strongly recommend that C4C demonstrates a greater commitment to making programmes specifically for this age group. (Paragraph 127)

9.Although we recognise the limited nature of the current remit, the Committee wishes to see Ofcom take action if it determines, using measurable outcomes, that C4C’s programming for older children and young adults remains inadequate. (Paragraph 128)

10.C4C plays an important role in the UK film industry via Film4, not least in terms of cultural exports. The Committee notes that this aspect of C4C’s work could be vulnerable if C4C was privatised. (Paragraph 132)

11.The Committee notes that C4C has put a lot of work and effort into its 360° Diversity Charter and we would be loath to see a private company discontinue the good work that C4C has done in this area. (Paragraph 142)

12.The Committee’s view is that there would be a considerable risk from privatisation to the diversity part of C4C’s remit. (Paragraph 143)

13.The Committee concludes that the amount of programming and the amount of investment made in the nations and regions, that is, outside London, could be adversely affected as a result of privatisation of C4C. (Paragraph 148)

14.We are not confident that the value of retaining the C4C brand would be a sufficient incentive to protect the distinctive culture and quality of C4C in the event of privatisation. (Paragraph 155)

15.The Committee notes that Ofcom does not have the power to revoke C4C’s licence and we are alarmed by the prospect that prospective new owners of C4C could walk away from their public service broadcasting obligations, with Ofcom unable to prevent this. (Paragraph 174)

16.The Committee has concerns that the same situation in terms of a reduction in its obligations as for ITV, could happen in the case of C4C, if subject to greater commercial pressures. (Paragraph 179)

17.The Committee notes that once a company has passed into private ownership it is very difficult to control what subsequently happens to it, as demonstrated by the issues currently facing Viacom, Channel 5’s owner. (Paragraph 185)

18.In the event of any proposal for part or full privatisation of C4C we expect the Government to set out its proposition for a full, public consultation. If statutory change were proposed we would expect this to be subject to pre-legislative scrutiny. (Paragraph 189)

19.If regulation by genre quotas was determined to be the best way to preserve the remit it would be necessary to determine how those genres were defined, and by whom. The Committee would expect Ofcom to play a key role in this process. (Paragraph 198)

20.If any form of C4C privatisation is taken forward, it will be necessary to consult on the impact of regulatory change, not just on C4C but on the public service broadcasting ecology. (Paragraph 199)

Impact of privatisation on creative landscape

21.The publisher broadcaster model with multiple suppliers is a core part C4C’s ability to deliver distinctive programming. The Committee recognises the need to protect this crucial role for C4C in supporting and commissioning smaller companies and recommends that, in the event of privatisation, this be made clear as part of their remit. (Paragraph 211)

22.The Committee think a C4C that makes a substantial part of its content in-house would have an adverse effect on the independent production sector. We are alarmed at the prospect of privatisation leading to a reduction in spending on independent production. (Paragraph 222)

23.We note the continuous process of reviewing aspects of the broadcasting industry is unsettling for the management of C4C. As we noted in our report on BBC Charter Renewal, Reith not Revolution, we consider that major changes should be considered principally at an appropriate interval such as a licence renewal, not on a constant basis between renewals. (Paragraph 226)

24.The Committee would expect the Secretary of State for Business, Innovations and Skills to consider the matter in the event of C4C privatisation as it would clearly be a matter of public interest. (Paragraph 236)

25.The Committee is not convinced that the current process of determining ownership, if C4C was offered for privatisation, would deliver an acceptable outcome for a privatised C4C. (Paragraph 239)

26.As we stated in paragraph 189, the Committee would expect the Government, in the event of any proposed privatisation, to ensure that an appropriately robust and transparent process of consultation be followed prior to Parliament’s consideration of the proposal. (Paragraph 240)

27.The Committee was concerned that, in the event of a privatisation, because of the limited number of advertising sales houses, a purchase by a UK company could be considered too great a risk under competition law, making it more likely that that an overseas company would be the buyer. (Paragraph 252)

28.The Committee has reservations about future potential owners, were C4C to be privatised, and we seek greater assurances from the Secretary of State that any new owner would be robustly held to conditions which ensured no negative impact on the viewer or the creative industries of the UK. (Paragraph 263)

29.We do not believe that the current system of licence holder evaluation would be suitable for the expectations and protections which should be in place for the sale of one of the UK’s major public service broadcasters. We are concerned that this is too light touch for a sale of an important UK public service broadcaster. (Paragraph 266)

Alternative ownership options

30.The Committee has considered the options of mutualisation and part-privatisation, as well as full privatisation. We have concluded that the risks and uncertainties of these approaches outweigh possible benefits for C4C and the creative industries of the UK. The Committee sees no substantive argument for changing the ownership of C4C. (Paragraph 285)

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