UK television production companies warn on Channel 4 reforms

Television production companies have warned the British government that its plans to reform Channel 4’s business model still risk undermining their sector, even as they welcomed the decision to drop its privatisation.

Culture secretary Michelle Donelan on Thursday confirmed she had scrapped the controversial plan of former prime minister Boris Johnson to sell the commercially funded, state-owned broadcaster.

But alongside the long-expected decision she also set out changes designed to safeguard Channel 4’s financial sustainability as global streaming platforms increasingly disrupt traditional broadcasters. They include plans to reform the so-called publisher-broadcaster model that prevents Channel 4 from making or owning content.

“We would be concerned at any changes imposed on Channel 4 to its hugely successful and vibrant indie-first commissioning model,” said James Burstall, chief executive of production company Argonon, whose shows include Cash in the Attic.

Supporters of the model, devised when Channel 4 was set up in 1982, said it has helped create a diverse and innovative UK independent television sector. Opposition to the government’s original privatisation plans in the sector stemmed from fears that it would have involved similar reforms to Channel 4’s commissioning practices.

Alex Mahon, Channel 4’s chief executive, told the Financial Times the proposed reforms were “positive” as long as they were “done in a way that does not unduly damage the sector”. While she welcomed the additional flexibility, she said “the indie sector is what Channel 4 is here to build and it is close to our hearts”.

According to its latest annual report, Channel 4 spent £670mn on content in 2021 and commissioned 294 production companies across TV, film and digital media.

The government warned on Thursday that Channel 4 was facing “unprecedented competition” in an era of deep-pocketed global streaming platforms. “Doing nothing also carries risks,” it said.

Donelan said that overall the reforms would “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 [it] must commission from independent producers.”

Relaxing the commissioning restrictions would allow Channel 4 to diversify its sources of revenue away from TV advertising by taking ownership of the content it broadcasts and selling those rights to other media companies. Any reforms would be introduced gradually and would be expected to place limits on Channel 4’s in-house production, according to the government.

Independent production executives questioned whether the change to Channel 4’s commissioning model was still necessary or workable now that ministers no longer needed to make the broadcaster more appealing to a commercial buyer.

“The development of an in-house production entity in order to retain intellectual property looks good on paper but will actually cost billions in investment and will take a lot of time,” said Patrick Holland, UK executive chair of Banijay, one of Europe’s largest independent production companies.

“It also could erode what is very special about Channel 4, which is that complete independence and its ability to take risk,” he added.

John McVay, chief executive of Pact, a trade association for UK production and distribution companies, said the reform proposals “could undermine the indie sector”. He added the government had “recognised they don’t want to damage the sector. Why would you throw it under the bus?”

Among other proposed changes, the government also plans to introduce a “new statutory duty” on Channel 4’s board members to protect its “long-term financial sustainability”.

The broadcaster’s chair Sir Ian Cheshire has already argued that the broadcaster has a sustainable long-term future. Channel 4 produced its highest ever pre-tax surplus — the equivalent of a profit — of £101mn in 2021, according to its annual report.

Dropping the privatisation plans will make it far easier for the government to push through the planned media bill, a broad package of reforms that aim to bring Britain’s broadcasting regime into the digital age. But some industry executives remain concerned the long delayed legislation would not be given priority.

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