Channel 4 is no stranger to privatisation talk – but this feels different
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”.
The FT reported that John Whittingdale, a firm supporter of a privatisation historically, is to lead a consultation
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.
Channel 4’s historic headquarters in London (pictured) has been watered down through a new site in Leeds. Pic: AP
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.
The FT reported that John Whittingdale, a firm supporter of a privatisation historically, is to lead a consultation
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.
Channel 4 has prided itself on alternative, original programming throughout its history. Pic: AP
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.
Global stock markets are seeing sharp declines and bitcoin has lost this year’s gains as worries intensify that the AI (artificial intelligence) boom has become a bubble fit to burst.
A small tear has certainly appeared in US tech stocks over the past week, with the tech-heavy Nasdaq closing below a key technical indicator for the first time since late April on Monday.
Key worries include not only high valuations but also vast investment spending in the AI space harming and delaying investor returns.
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Sharp stock market falls were seen across large parts of Asia and Europe following the retreat on Wall Street.
Japan’s Nikkei 225 shed more than 3% while the Hang Seng in Hong Kong lost 1.7%.
In Europe, the FTSE 100 was down by just over 1% while Germany’s DAX and the CAC in Paris were 1.2% and 1.3% lower in early afternoon dealing.
Nerves are jangling over tech as the market awaits financial results from Nvidia on Wednesday night.
The stock market wobble began on Wall Street and many analysts say it’s a healthy move. Pic: AP
They are likely to be crucial in determining the path for shares ahead.
The world’s largest company by market value is the beating heart of Wall Street’s artificial intelligence boom and any sign of slowdowns, for both revenues and profits, will be catalysts for further sell-offs.
Fears have been growing for months that record values are overdone.
Stocks linked to AI suffered particularly on Monday, building on declines seen last week, and futures indicated more pain to come when trading begins in the US, though drops were expected to be limited.
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Financial analysts said baskets of top AI-linked stocks had now entered so-called correction territory, falling more than 10% in short order this month.
Others pointed to an impact on confidence in the crypto market.
Bitcoin, which hit a $125,000 spot rate level only last month, stood at $91,000 on Tuesday.
It had begun the year around the $94,000 level.
Victoria Scholar, head of investment for Interactive Investor, said: “This year was meant to be the year of the bitcoin bulls supported by a highly crypto-friendly administration in the White House and Trump’s ‘less is more’ approach towards regulation.
“However, fears of an AI bubble and concerns about the market’s heavy dependence on a handful of tech giants have caused investors to dial back their exposure to speculative assets such as bitcoin.
“There’s a general sense of nervousness that has captured the market mood lately and bitcoin appears to be in the firing line.”
Wider sentiment has also been harmed by weaker bets on the prospects for a further interest rate cut by the US central bank next month.
Many financial analysts described the stock market shifts as a healthy correction, given all the uncertainties which include the possibility of a US court ruling against Donald Trump’s reciprocal tariffs regime ahead.
Mike Gallagher, director of research at Continuum Economics, told Sky’s US partner CNBC that the market action implies equities could fall about 5% from recent highs – or “a bit more”.
“There’s some things coming over the horizon that make you want to take a bit of risk off the table,” he told the channel’s Squawk Box Europe show.
“So, part of it is just natural pocket taking, part of it is thinking, ‘well, is the macro story going to be perfect? No, it’s not.”
He concluded: “To get a major sell-off, you may need major bad news, and that we haven’t actually got to that point yet.”
In the hour after Wall Street opened, the tech company-heavy Nasdaq Composite had dropped nearly 1.8%.
The S&P 500 US index of companies relied on to be stable and profitable, lost more than 1% and the index of 30 major companies listed on US stock exchanges, the Dow Jones Industrial Average (DJIA), dropped 1.3%.
A crackdown on online pricing has seen investigations opened into eight companies, with a further 100 facing warnings over their conduct.
The competition watchdog said it was formally examining practices at StubHub, viagogo, AA Driving School, BSM Driving School, Gold’s Gym, Wayfair, Appliances Direct and Marks Electrical.
The Competition and Markets Authority (CMA) said the 100 other companies, which it did not identify, were getting letters outlining concerns about additional fees and sales tactics.
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The action against StubHub and viagogo – part of the same company after a 2021 merger – was revealed as the government reportedly prepares to separately confirm a ban on the resale of tickets for live events above their face value.
It is part of a long-threatened crackdown on touts to shield consumers from rip-off prices.
The regulator’s separate action falls under the new Digital Markets, Competition and Consumers Act which gives it additional powers to protect consumers.
The CMA said StubHub and viagogo were under review “regarding the mandatory additional charges applied when consumers buy tickets – and whether or not these fees are included upfront”.
The AA Driving School and BSM Driving School were being investigated over their “presentation of mandatory fees on these sites”, the CMA said, “specifically, whether these fees are included in the total price the consumer sees at the beginning of the purchase process.”
Gold’s Gym is under investigation over its presentation of a one-off joining fee for its annual membership, and whether the way it presents this fee breaks the law.
It explained that the examination of homeware retailers Wayfair, Appliances Direct, and Marks Electrical was related to whether their time-limited sales “ended when they said they would, or whether customers are being automatically opted in to purchasing additional services”.
Commenting on the CMA’s action an AA Driving School spokesperson said: “We are comfortable that the £3 booking fee for lessons is already transparent and in line with the CMA’s rules and are more than happy to additionally notify customers earlier in the journey as well, which we have already done.”
The other companies were yet to comment.
The CMA’s first major act under the new digital market rules was to give itself special oversight over Apple and Google.
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The CMA’s so-called “strategic market status” rulings mean both companies will face specific obligations to limit their dominance in smartphone and tablet operating systems (iOS and Android respectively), app distribution and browsers.
Commenting on its latest inquiry, CMA chief executive Sarah Cardell said: “At a time when household budgets are under constant pressure and we’re all hunting for the best deal possible, it’s crucial that people are able to shop online with confidence, knowing that the price they see is the price they’ll pay, and any sales are genuine.
“Whether you’re spending your hard-earned cash on concert tickets or driving lessons, joining a gym or buying furniture and appliances for your home, you deserve a fair deal.
“It’s our job to protect consumers from misleading prices and illegal pressure selling and today marks an important milestone as we take action across the economy to make sure businesses do the right thing by their customers.”
“Since the launch of the new regime, we’ve been working hard to help businesses understand the law. But alongside supporting businesses to comply, we’ve always been clear that we will take swift action where we suspect potentially serious breaches of the law.
“This is just the start of our work. Any businesses who break consumer law should be in no doubt we will stamp out illegal conduct and protect the interests of consumers and fair-dealing businesses.”
Rubbish will continue rotting in the streets of Birmingham for months, union chiefs have warned, after more workers voted to join industrial action.
Agency workers employed by Job&Talent are now joining the dispute for the first time, with the Unite union blaming “an epidemic of bullying, harassment and intimidation”.
And with workers voting to extend the already months-long strike, the union says bins could go uncollected beyond next year’s local elections in May.
Former Labour leader Jeremy Corbyn (centre left) on the picket line in Tyseley, Birmingham, to support striking bin workers. Pic: PA
It comes after footage obtained by Sky News captured a manager from Job&Talent warning agency staff that those who join the strike would be blacklisted by the council.
In the clip, he says: “Those people that do decide to join the picket line, then the council have confirmed to us that they are not going to get a permanent job.”
Unite general secretary Sharon Graham added: “This is a real escalation in the dispute with agency workers now joining picket lines due to the terrible way they have been treated by Job&Talent and Birmingham council.
“The council is spending a fortune it doesn’t have on a dispute that could easily be resolved by agreeing a fair deal for workers.
“Unite does what it says on the trade union tin; we are totally committed to fighting for the jobs, pay and conditions of all members.
“Agency and directly-employed workers alike in Birmingham council’s refuse service have the union’s complete and utter support.”
Striking refuse workers outside Perry Barr depot in Birmingham. Pic: PA
A spokesperson for Birmingham City Council said: “While we are disappointed the dispute has not been resolved as Unite has rejected all our offers, we are continuing to make regular waste collections and our contingency plan is working.
“We have been collecting an average of approximately 1,330 tonnes of kerbside waste every day, more than we did prior to industrial action, and over the last six months we have collected over 100,000 tonnes of kerbside waste.
“There has been a 22 per cent increase in tonnage of waste collected per employee and a 52 per cent improvement regarding missed collections.
“A small number of agency staff are in a separate dispute with Job&Talent. The city council has contingency plans and will continue to look to maintain residents with a minimum of one collection a week.
“Meanwhile we continue to move forward with the service improvements that are long overdue and that our residents need.”
Uncollected refuse bags in the Aston area of Birmingham. Pic: PA
The council also said it would not tolerate blacklisting, and had investigated the matter, but concluded no blacklisting had taken place.
In a statement last week, Job&Talent responded to the leaked footage.
Read more:
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Birmingham bin strikes: How residents are taking action
The statement read: “Job&Talent is aware of a short video clip circulating online which shows a Job&Talent manager speaking to agency workers at one of the city’s refuse depots.
“The comments made in the recording were part of a longer discussion and do not reflect the position of Job&Talent.
“We do not engage in or condone any form of blacklisting, and no worker is or would be denied employment opportunities on the basis of lawful participation in industrial action.”
Unite said Job&Talent workers would be able to join the picket line from 1 December.
Bin workers have been locked in a standoff with the council over proposed pay cuts for most of the year.
Union bosses say council plans will leave 171 workers £8,000 worse off a year.
Collections have been disrupted since January, but the row descended into an all-out strike in March.
Uncollected refuse bags in the Sparkhill area of Birmingham. Pic: PA
The council soon declared a major incident and rubbish has continued to pile up across the city as the dispute continues.
Unite claims there have been no formal negotiations over ending the dispute since May.
The union’s lead officer, Onay Kasab, said: “Residents of Birmingham will be rightly concerned to see that the misery of bin strikes can continue through Christmas, New Year and beyond May’s local elections but the council is solely responsible for the ongoing dispute.
“Unite remains fully committed to return to meaningful negotiations to secure a fair deal for affected workers while also ensuring the endemic bullying culture and threats of blacklisting are stamped out.”
In a statement, Job&Talent said: “We acknowledge the ballot outcome and will continue working closely with our workers to address any concerns.
“The result reflects only a small portion of our overall workforce.
“As addressed previously, Job&Talent remains firmly committed to operating with transparency, integrity, and full compliance with employment laws.”
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