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Channel 4 Hits Back at U.K. Government With New $1.25 Billion Plan to Stay Independent

Alex Mahon/Channel 4

U.K. broadcaster Channel 4, which is facing the threat of being privatized by Boris Johnson’s government, has revealed an unsuccessful counter-proposal to remain independent.

A key element of the proposal, which is titled “4: The Next Episode,” is creating an intellectual property joint venture (JV) proposition with an external investor as majority shareholder, which would see a significant private capital investment into Channel 4 for the first time. The broadcaster claims it would bring £1 billion (£1.25 billion) of new British investment in British content by 2030. Some aspects of the plan, which was presented to the government in February, were leaked to the press in April.

Channel 4, which currently operates on a broadcaster-publisher model, where all programming is commissioned from external producers (Channel 4 doesn’t have an in-house production outfit), says that it would “reinvest revenues from the secondary sale of IP [presumably by setting up a distribution outfit] into domestic U.K. content commissioning, bringing new money into the ecosystem” and that it would benefit from IP without breaching the publisher-broadcaster model.

“Establishing a one-stop shop for financing for independent production companies, removing the challenges of assembling complex financing structures and speeding up recommissioning,” was listed as another benefit of this model, as was developing its domestic VOD platform All 4 as a streamer that’s operational globally. The service has hit 1.5 billion views, an increase of 21% year-on-year, Channel 4 said.

“Complete commission control would sit with us,” Channel 4 chief content officer Ian Katz told media as part of a press event unveiling the proposal on Thursday.

“4: The Next Episode” would generate around £11 billion in added gross value, the broadcaster said.

U.K. government responded to the proposal with a White Paper that proposes complete privatization in order to “give [the broadcaster] the tools it needs to succeed in the future as a public service broadcaster while protecting its distinctiveness.”

While Channel 4 CEO Alex Mahon was appreciative of some points made in the White Paper, such as “prominence,” where U.K. broadcasters’ content will be made easy to find on connected devices and major online platforms, she was scathing about the rest.

“We did discuss them [the proposals] in detail with government. And clearly, it’s not the choice they made. I think that’s disappointing and a shame for the U.K. creative industries,” Mahon said, adding that the proposal lays out the benefits numerically.

Mahon also reiterated that loss-making programming like the Black to Front initiative where an entire day of programming was led by Black personnel behind and in front of camera and the Paralympics coverage wouldn’t have been possible at a profit-driven organization, and that acclaimed programs like “It’s a Sin” and “Gogglebox” were turned down elsewhere.

The executive also underlined that Channel 4 is in profit and in robust financial health. “It is not factually true to say that there is any evidence that we will fail financially in future,” Mahon said, pointing out that the last four years had been financially successful for the broadcaster.

Channel 4 had its strongest year in its history in 2021. Early figures provided by the broadcaster indicate revenues of £1.2 billion (up from £934 million in 2020), a financial surplus of £100 million and cash reserves of £272 million.

One of the key issues raised during the privatization debate is that of Channel 4 competing with the global streamers. Mahon pointed to Netflix’s recent subscriber shrinkage and said streamers would need to “put more financial discipline in place about how they spend on programming, and about how they have to manage their schedules, much in a way that broadcasters have had to do for some time. So probably that era of unlimited, unmitigated, uncontrolled content spend is going to become more disciplined. That’s what we’re seeing across the board.”

Meanwhile, the Channel 4 proposal at this stage remains just that — a proposal. The government’s White Paper will have to pass through numerous debates over both houses of U.K. parliament to become law. In the interim, the broadcaster will continue pursuing international expansion for All 4, its training and skills program, spending money outside of London, and scaling up outside of London.

Variety's Naman Ramachandran contributed to this post.

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