Channel 4 would seek private cash and launch Global All 4 in alternative to privatisation plan

C4 reveals alternative to privatisation plan

Channel 4 has unveiled its alternative plan to privatisation, in which the publicly-owned broadcaster would bring in private investment for the first time as well as relaunch streaming service All 4 as a global streaming service.

The plans were discussed with the Government before the launch of the broadcasting sector White Paper, the broadcaster revealed today.

Now that the Government has effectively rejected C4’s proposals by reiterating its desire to privatise the company, the broadcaster has decided to put them in the public domain under the title of 4: The Next Episode.

Chief among the plans would be to raise private capital for the first time in its almost-40-year history, as well as enable greater borrowing through new debt arrangements. Although owned by the Government and bound by a public-service broadcasting (PSB) remit, C4 is funded entirely through commercial income and must reinvest any surplus into programming.

‘One stop-shop for financing’

Under its proposals announced today, C4 would hope to bring in an additional £200m of annual investment by creating an “intellectual property (IP) joint-venture” with an external investor. That would significantly grow overall revenue compared to last year, in which C4 made a record £1.2bn in revenue with a surplus of £100m.

This investor would be a majority shareholder and “provide access to debt outside of the public sector balance sheet”. C4 envisages that the scale of the JV would expand over time.

Channel 4 would then, it is thought, reinvest revenues from the secondary sale of IP into domestic content commissioning. It would enable Channel 4, when commissioning via the new JV, to benefit from IP without breaching the publisher-broadcaster model, the company said.

Meanwhile, it would create a “one-stop shop for financing for independent production companies and remove the challenges of assembling complex financing structures and speeding up recommissioning”.

Media and tech analyst Ian Whittaker told The Media Leader he saw no reason why C4’s proposals couldn’t be done by a private buyer that would buy the business and set up a similar JV.

However, Whittaker questioned the assumptions behind the benefit estimates C4 produced. “The £500m privatisation value is way off the £2bn that was being talked about last week (which is a very punchy valuation),” Whittaker said. “What does the financial partner expect in terms of financial returns and how much influence Channel 4 will have over the JV? what happens if there is a disagreement on the plans?”

Stephen Arnell, a TV editorial consultant columnist for The Media Leader, agreed and added: “This confirms that the government was determined to privatise Ch4 whatever proposals the broadcaster came up with. Any JV would have had to be ring-fenced so that Ch4 in the UK was not in the hole in case it failed.”

However, company execs would not be drawn on whether it would place restrictions on the prospective financial partners it would work with on such a significant venture.

Responding to questions from The Media Leader this morning, chief commercial officer Jonathan Allan and chief content officer Ian Katz insisted the proposed IP model would still enable C4 to commission content that is in line with its PSB remit.

“We’ve carefully considered that,” Allan said. “C4 makes a range of programming that fits our remit and we have a range of funding arrangements already. We felt there was a range of programming that an external partner would have been interested in and the formats that we produce are globally famous and successful. That could have been interesting.”

Katz added: “Complete commissioning control would sit with us. We have a number of different ways of funding programming at the moment. For instance we have our global format fund, content finance where we partner with people like Motion Content but we make all the commissioning decisions.”

Raymond Snoddy, a media consultant and broadcaster who writes a weekly column for The Media Leader, described the move as “an excellent compromise”.

“One of the Government’s main arguments for a sale is that it would give the broadcaster access to capital for expansion. This new plan offers an excellent compromise – keep Channel 4 in public hands while bringing in a private company to take a majority stake in the launch of a Global All 4 streaming service.

“This will do nothing to change the mind of Nadine Dorries but it might help give Conservative MPs worried about the impact of privatisation something to get behind.”

All 4 would go global

All 4, C4’s streaming service, would also be relaunched as Global All 4 under the plans. The broadcaster has pledged to create British content that will be exported globally and become a “digital-first” public-service broadcaster.

The company’s plans stated that taking All 4 international would “[provide] a platform to export British IP to a young, global audience. This multi-genre offer would leverage our unique brand and content expertise to generate new revenue for Channel 4, increase the profile and reach of British producers, and boost British cultural diplomacy.”

C4 has also pledged to enshrine in its licence a commitment to commission at least 50% of its content from the Nations and Regions every year. It also plans to “significantly” expand its Leeds-based digital content production arm, 4Studio, and double spending on 4Skills to £10m over the next decade.

In a clear nod to the Government’s so-called “levelling up” agenda, C4 added it will become a “Northern-based broadcaster” with a majority of its workforce outside of London. After the 2016 Brexit referendum, the Government decided C4 should relocate its headquarters outside of London and the company opened its new premises in Leeds last year.

As C4 expands outside of London, it would also “streamline” its presence in London by creating a new base that supports new ways of working. While the plan says C4 would require a “different scale London base”, CEO Alex Mahon told a press conference today the business has no plans to sell its site in Horseferry Road.

Whittaker said: “Ideas of globalising All4 makes sense (Britbox International, for example, has been successful) and the move to becoming a Northern-based broadcaster is a clear attempt to influence the Red Wall (although it misses the point that the Northern cities are increasing miles apart politically from the other Northern seats).”

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