Channel 4 is no stranger to privatisation talk – but this feels different

Published

4 years ago

June 18, 2021

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Almost since Channel 4 launched 38 years ago, with the first episode of Countdown, there has been speculation that it is facing privatisation.

In January 1983, just two months after the channel launched, Kevin Goldstein-Jackson – the executive who helped launch hits like Tales of the Unexpected and who later headed the ITV franchise operator Television South West – was calling for it to be privatised.

As Margaret Thatcher’s privatisation revolution rolled on through the 1980s, the calls kept coming, often from surprising directions.

In 1987, Michael Grade, who was then managing director of BBC television and who later went on to be dubbed Britain’s ‘pornographer in chief’ when he became Channel 4’s chief executive, said “it would be a very good thing indeed for British broadcasting if that were to happen”.

Somehow, though, Channel 4 managed to remain state-owned. The last serious calls for the broadcaster to be privatised came after David Cameron’s 2015 general election victory, when John Whittingdale, the then Culture Secretary and Matt Hancock, the then Cabinet Office Minister, were said to be pushing for it.

A key aspect to their proposal was that it would raise up to £1bn for the government.

Now, however, privatisation talk is again in the air.

The Financial Times reported on Friday that Channel 4 will be “steered towards privatisation” by the UK government as soon as next year. It said ministers were set to launch a formal consultation within weeks on the future of the broadcaster.

This could, according to the FT, even see an outright sale of Channel 4.

Ominously for Channel 4, which has always opposed being privatised, the FT said the consultation would be run by Mr Whittingdale himself.

There are a number of reasons why the idea has resurfaced now. The first is that, in the eyes of some in government, Channel 4’s business model is under pressure. As a free-to-air broadcaster that has few programme rights to exploit, it is unusually exposed to the vagaries of the advertising market, as has been shown during the last year.

The broadcaster reported a pre-tax loss of £26m in 2019 – Channel 4 itself has put this down to the cost of opening its new site in Leeds – but then suffered a collapse in advertising revenues when the COVID-19 pandemic erupted in March last year.

For its part, Channel 4 itself has said that it expects to report a surplus for the year, with advertising having bounced back strongly in the second half of the year.

The broadcaster also shored up its finances with aggressive cuts to its budget during the pandemic and by taking out loans. One indication of its recovery to financial health was that it repaid furlough money to the Treasury as long ago as last autumn.

It is also argued that the rise of streaming platforms like Amazon Prime, Disney+ and Netflix and the continued strength of multi-channel television broadcasters like Sky, the owner of Sky News, makes Channel 4 vulnerable to a loss of viewers that would eventually hit its advertising revenues.

Channel 4 has responded by arguing that, in 2020, it actually raised its share of television viewing, not only in terms of linear television, but also via digital platforms. It said at the end of last year that digital viewing now accounted for one in every eight hours of Channel 4 viewing.

Despite all this ministers fear that, as a business, Channel 4 is unusually vulnerable.

Earlier this year, Oliver Dowden, the Culture Secretary, vetoed the reappointment of two of Channel 4’s directors, Uzma Hasan and Fru Hazlitt, even though both Channel 4 itself and Ofcom, the broadcasting regulator, were supportive.

It was reported at the time that Mr Dowden wanted the two women, both of whom come from a production background, replaced with new directors boasting more financial experience.

Another reason why privatisation may be back on the agenda is the public finances.

Some in Whitehall believe that a significant sum of money could still be made from a sale of Channel 4 – although most analysts who have run the numbers believe any sale proceeds would fall well short of the £1bn mooted six years ago.

It is also argued that a new owner for Channel 4, with deep pockets, might help ensure the quality of its output. The problem is that there are few obvious buyers out there for the channel.

Most of the big US buyers who might be interested are focused on other things while Channel 4’s relative lack of intellectual property rights – a big contrast with, for example, ITV – means there would be few gains to be made by a big media buyer.

Viacom-CBS, the owner of Channel 5, is seen as the likeliest buyer but it, too, is more focused currently on building its streaming service, Paramount+, as well as trying to shore up confidence among its investors after a calamitous drop in its share price earlier this year related to the collapse of the hedge fund Archegos Capital.

Investors also suspect Viacom-CBS will be looking to conserve capital to invest more in content as it battles it out with rivals like Netflix and Disney, whose Disney+ streaming service has strongly outperformed Wall Street’s expectations, rather than use it buying an asset like Channel 4.

Moreover, if any of the big US broadcasters were interested in acquiring a UK free-to-air broadcaster, they are far more likely to alight on ITV which, unlike Channel 4, has its own production arm in ITV Studios and far more intellectual property assets to exploit.

That might make a flotation on the stock market, which would provide Channel 4 with more access to capital, as a likelier outcome – although it has been speculated in some quarters that ITV itself might be a buyer.

Expect Channel 4 to strongly resist any attempt to privatise it.

In the past the broadcaster has been able to muster a substantial lobbying campaign, relying on members of the arts establishment, to argue that its remit to produce distinctive programming would be jeopardised by a change of ownership.

It is also likely to point to the fact that it is a major investor in British content and spends heavily with independent production companies.

That, however, is a harder argument to make when the likes of Sky and Netflix are investing record sums in British programming, when the BBC’s drama output is still scoring hits and when ITV’s production arm is in such fine fettle.

In short, a lot of the arguments Channel 4 has used to resist privatisation in the past may not be as pertinent as was once the case.

This may represent Mr Whittingdale’s best opportunity yet to push for a policy he has sought for 25 years.

Business

How markets reacted to uncertainty over Rachel Reeves’s future

Published

2 hours ago

July 3, 2025

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How markets reacted to uncertainty over Rachel Reeves's future

The pound fell and state borrowing costs rose during a period of uncertainty over the chancellor’s future on Wednesday.

During Prime Minister’s Questions, Sir Keir Starmer declined to guarantee whether a visibly emotional Rachel Reeves would remain chancellor until the next election following the government’s welfare bill U-turn.

Money blog: Cash in your pocket set to change

Following his remarks, the value of the pound dropped and government borrowing costs rose, via the interest rate on both 10 and 30-year bonds.

Although market fluctuations are common, there was a reaction following Sir Keir’s comments in the Commons – signalling concern among investors of potential changes within the Treasury.

Sterling dropped to a week-long low, hitting $1.35 for the first time since 24 June. The level, however, is still significantly higher than the vast majority of the past year, having come off the near four-year peak reached yesterday.

While a drop against the euro, took the pound to €1.15, a rate not seen since mid-April in the aftermath of President Donald Trump’s tariff announcements.

Meanwhile, the interest rate investors charge to lend money to the government, called the gilt yield, rose on both long-term (30-year) and ten-year bonds.

The UK’s benchmark 10-year gilt yield – so-called for the gilt edges that historically lined the paper they were printed on – rose to 4.67%, a high last recorded on 9 June.

And 30-year gilt yields hit 5.45%, a level not seen since 29 May.

Both eased back in the hours following – as a spokesperson for the prime minister attempted to quell speculation about the chancellor’s future.

Sky News understands the prime minister made clear to the chancellor that she has his “complete support” and remains integral to his project.

Ms Reeves has committed to self-imposed rules to reduce debt and balance the budget. Speculation around her future led investors to question the government’s commitment to balancing the books – and how they would do that.

The questions over her future came after the government scrapped the core money-saving component of its welfare bill, which had been intended to reduce spending in order to meet fiscal rules.

Business

More bad news for Elon Musk as Tesla deliveries miss target again

Published

2 hours ago

July 3, 2025

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More bad news for Elon Musk as Tesla deliveries miss target again

Tesla’s woes have deepened as latest production and deliveries figures showed a greater fall than expected.

A total of 384,122 Teslas were delivered from April to June this year, a 13.5% drop on the same period last year and the second quarter of slumping output.

Wall Street analysts had expected Tesla to report about 1,000 more deliveries.

It’s bad news for Tesla chief executive Elon Musk in a week of attacks from President Donald Trump on him personally, as well as his companies.

Money blog: Customers to get up to £2,000 compensation from water companies

Mr Musk found himself on the wrong side of Mr Trump and the majority of US congresspeople in his opposition to the so-called big beautiful bill approved by the US Senate.

His criticism of the inevitable debt rises the bill will result in led Mr Trump threatening to end subsidies for Mr Musk’s numerous businesses and to deport him.

His role as founder and chief executive of numerous businesses has made him the world’s richest man, according to Forbes.

As well as Tesla, Mr Musk founded space technology company SpaceX and Starlink. He also acquired the social media company Twitter, which he rebranded X.

It was the poor performance of Tesla that pushed him out of full-time politics and back to the Tesla offices.

After months of share price tumbles and protests at Tesla showrooms, sales drops and car defacings, Musk left his work with the Trump administration’s Department of Government Efficiency (DOGE).

Not everyone viewed the figures as negative.

Analysts at financial services firm Wedbush said: “Tesla’s future is in many ways the brightest it’s ever been in our view given autonomous, FSD [full self-driving], robotics, and many other technology innovations now on the horizon with 90% of the valuation being driven by autonomous and robotics over the coming years but Musk needs to focus on driving Tesla and not putting his political views first.”

After a 5% share price fall earlier this week when Mr Musk strayed back into political matters, Tesla stock rose 4.5% on Wednesday.

The latest financial details for Tesla will be published later this month.

In the first three months of the year, Tesla’s profits fell by 71% to $409m (£306.77m) from $1.39bn (£1.04bn). Revenues were also well below forecasts, dropping 9% to $19.3bn (£14.5bn).

Business

AstraZeneca exit is a frightening prospect for the City and the government

Published

17 hours ago

July 2, 2025

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AstraZeneca exit is a frightening prospect for the City and the government

It’s a threat that will send a shiver down the spine of Downing Street and shake the City of London to its core.

Even the notion that AstraZeneca (AZ) – the UK’s most valuable listed company – is thinking of upping sticks and switching its stock market listing to America is a frightening prospect on many levels.

After all, if your biggest firm departs for Wall Street, what message does it send to an already bruised London stock market that has struggled to find its way since the UK’s vote to leave the European Union?

Money latest: Cash in your pocket set to change

The timing of the report in The Times that Pascal Soriot, the pharmaceutical company’s long-standing chief executive, is considering his own Brexit for the company, will not be lost on anyone.

The Treasury is under severe strain and the Starmer government, apparently focused on compromise given its welfare reform U-turns, bruised.

Ministers have been scrambling to get the support of business back, after a budget tax raid that has added to the cost of employing people in the UK, by launching a series of strategies to demonstrate a growth-led focus.

Mr Soriot’s reported shift is the culmination of years of frustration over UK tax rates and support for business – though it could also remove a focus on his own remuneration as the highest-paid director of a UK-listed firm.

AZ has its own gripes with Labour.

In January, the company cancelled a planned £450m investment in a vaccine factory on Merseyside, accusing the government of reneging on the previous Conservative administration’s offer of financial aid.

At the same time, it has been rebuilding its presence in the United States.

That speaks to not only a home market snub but also the election of a US president intent on protecting, as he sees it, America-based companies and jobs.

Donald Trump is threatening 25% tariffs on all pharma imports.

AZ has already promised a $3.5bn (£2.6bn) investment in US manufacturing by the end of 2026.

It has also rejoined the leading US drug lobby group, bolstering its voice in Washington DC.

There are sound reasons for bolstering its US footprint; more than 40% of AZ’s revenues are made in the world’s largest economy. Greater US production would also shield it from any duties imposed by Mr Trump and any MAGA successor.

Since Brexit, complaints among UK stock market constituents have been of low valuations compared to peers (with a weak pound also leaving them vulnerable to takeovers), weaker access to capital and poor appetite for new listings.

Wise, the money transfer firm, became the latest UK name to say that it intends to move its primary listing to the US just last month.

If followed through, it would tread in the footsteps of Flutter Entertainment and the building equipment suppler CRH – just two big names to have already left.

London was snubbed for a listing by its former chip-designing resident ARM back in 2023.

An initial public offering by Shein, the controversial fast fashion firm, had offered the prospect of the biggest flotation for the UK in many years but that was blocked by the Chinese authorities.

Efforts to bolster the City’s appeal, such as through the Financial Conduct Authority’s overhaul of listing rules and the creation of pension megafunds to aid access to capital, have also been boosted in recent months by investors in US companies taking a second look at comparatively low valuations in Europe.

Market analysts have charted a cash spread away from the US as a hedge against an erratic White House.

The Times report suggested that Mr Soriot’s plans were likely to face some opposition from members of the board, in addition to the UK government.

AstraZeneca has not commented on the story. Crucially, it did not deny it.

But a government spokesperson said: “Through our forthcoming Life Sciences Sector Plan, we are launching a 10-year mission to harness the life sciences sector to drive long-term economic growth and build a stronger, prevention-focused NHS.

“We have already started delivering on key actions, from investing up to £600m in the Health Data Research Service alongside Wellcome, through to committing over £650m in Genomics England and up to £354m in Our Future Health.

“This is clear evidence of our commitment and confidence in life sciences as a driver of both economic growth and better health outcomes.”

Governments don’t comment on stories such as these, but you can bet your bottom dollar that the departure of your biggest firm by market value is not the message a government laser-focused on growth can afford to allow.