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

Published

3 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

Post Office lawyer accused of telling ‘big fat lie’ to Horizon inquiry

Published

14 hours ago

May 3, 2024

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Post Office lawyer accused of telling 'big fat lie' to Horizon inquiry

A former top Post Office lawyer has been accused of telling the Horizon IT inquiry a “big fat lie” over his knowledge of a bug in the system that could have stopped wrongful prosecutions of sub-postmasters in their tracks.

Jarnail Singh was a senior in-house lawyer and subsequently head of criminal law at the Post Office from 2012.

The inquiry into the Horizon scandal heard he was copied into an email containing a report which identified the glitch in the accounting system but denied knowledge of it for years – despite saving the document and printing it out.

Mr Singh denied the claims by Jason Beer KC, counsel to the inquiry.

Mr Beer said the report was sent to Mr Singh just three days before sub-postmaster Seema Misra’s case began in October 2010.

Ms Misra was eight weeks pregnant when she was handed a 15-month prison sentence after being accused of stealing £74,000 from her branch in West Byfleet, Surrey.

Her conviction was later quashed by the Court of Appeal.

Mr Singh said he “wasn’t made aware” of the report, written by Fujitsu engineer Gareth Jenkins.

Explanation of bug

Mr Beer said it described a bug “that will result in a receipts payment mismatch” and offered an explanation for apparent cases of theft among sub-postmasters.

He added that a file address on the bottom of the document, which included Mr Singh’s name, showed the lawyer had both saved the report to his drive and printed it out only nine minutes later.

He said this proved Mr Singh had lied years later when he denied having advance knowledge of the issues uncovered by a 2013 report carried out by forensic accounting firm Second Sight.

Mr Singh said he also did not know how to save or print documents during his employment at the organisation and had to ask others to do it for him.

Mr Beer accused Mr Singh of telling “a big fat lie” to the inquiry and of having failed to disclose important information to the defence or court ahead of Ms Misra’s prosecution, asking: “You’d known about the bug all along hadn’t you, Mr Singh?”

The lawyer responded: “No, that’s not true.”

Admission of mistakes

He also denied any suggestion of a cover up but admitted that “mistakes were made” in the prosecution of Ms Misra.

Mr Singh said: “I’m ever so sorry Ms Misra had suffered and I am ever so embarrassed to be here, that we made those mistakes and put somebody’s liberty at stake and the loss she suffered and the damage caused which was not what this was about.”

Following her case, hundreds of people were later wrongly convicted of stealing after bugs and errors in the accounting system, operated by Fujitsu, made it appear as though money was missing at their branches.

There were more than 700 convictions in total, dating back from 1995 to 2015.

Victims not only faced prison but financial ruin. Others were ostracised by their communities, while some took their own lives.

Fresh attention was brought to the scandal after ITV broadcast the drama Mr Bates Vs The Post Office, prompting government action that aims to speed up the clearing of names and payments of compensation.

Business

Worry for economy as public sector productivity falls further

Published

20 hours ago

May 3, 2024

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Worry for economy as public sector productivity falls further

Official figures have raised fears of a deepening public sector drag on the the UK’s economic recovery from recession.

Data from the Office for National Statistics (ONS) showed that productivity in the public sector, dominated by education and healthcare, deteriorated between the third and fourth quarters of 2023.

It measured a 1.0% decline over the period, leaving the figure 2.3% lower than a year ago and even further away from recovering pre-pandemic levels.

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The gap was put at 6.8%.

Public sector productivity measures the volume of services delivered against the volume of inputs – like salaries and government funding – that are needed to maintain those services.

While the sector has witnessed hits from the impacts of strikes since the end of the COVID crisis, the NHS has struggled to deal with a worsening backlog in many key waiting lists.

Rows over funding have been exacerbated by record levels of long-term sickness.

The official jobless rate stands at just over 4% – around 1.4 million people.

However, the numbers judged to be economically inactive due to poor health are nearing double that sum.

The Office for Budget Responsibility has estimated that the issue has added around £16bn to annual government borrowing bills.

Pressures have been reflected in ONS data, with output in both the health and education sectors falling during the fourth quarter of the year – contributing to the country’s recession.

That was despite rising inputs over the period.

Back in March, chancellor Jeremy Hunt used his budget to announce a Public Sector Productivity Plan – with an emphasis on improving technology in the National Health Service (NHS).

Figures next week are widely expected to confirm the end of the recession, with overall output returning to growth during the first quarter of the year.

Recent private sector surveys have painted a rosy picture for the dominant services sector, which accounts for almost 80% of overall output, despite continued pressure on budgets from the impact of higher inflation and interest rates to help cure the price problem.

Business

Apple reports biggest drop in iPhone sales since early months of pandemic – and reveals AI plans

Published

1 day ago

May 3, 2024

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Apple reports biggest drop in iPhone sales since early months of pandemic - and reveals AI plans

Tech giant Apple has recorded the biggest drop in iPhone sales since the early months of the COVID pandemic.

Sales for January to March were down 10% on the same period last year – something not seen since the 2020 iPhone model was delayed due to lockdown factory closures.

Overall, Apple earned $90.8bn (£72.4bn) in the latest quarter – down 4% from last year. It was the fifth consecutive three-month period that the company’s revenue dipped from the previous year.

Apple’s profit in the past quarter was $23.64bn (£18.85bn) – a 2% dip from last year.

It was good news, however, for the overall value of the company as its share price rose nearly 7% after investors had expected a bigger drop in sales.

Meanwhile, Apple chief executive Tim Cook has discussed how the company is set to use artificial intelligence (AI).

While rival Samsung introduced phones that can feature AI, including generative AI chatbots, Apple has yet to announce how it will be embedded into its iPhones.

The next iPhone is expected to feature AI microchips and bigger screens.

Apple will reveal the newest software when it holds its annual developers’ conference in June.

Generative AI could power phones to write software code, essays or create images based on a prompt by users.

Mr Cook said the company feels “very bullish about our opportunity in generative AI and we’re making significant investments”, adding: “We’re looking forward to sharing some very exciting things.”