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Channel 4: a national treasure?

Channel 4 has been named Channel of the Year at the Edinburgh International Television Festival. But what does the future hold?

Channel 4 headquarters in Horseferry Road, London. Philip Toscano / PA Wire/Press Association Images. All rights reservedChannel 4’s new drama series, National Treasure, strikes familiar notes: politically engaged, contemporary, challenging. An ageing comedian, played by Robbie Coltrane, now reduced to presenting a daytime show on Channel 4 (where else?), is accused of sexual crimes in the distant past. A pair of odiously fashionable commissioning editors at Horseferry Road tells him his hosting duties will not be needed for the time being.

Meanwhile, Channel 4’s own transition from national institution to national treasure was reinforced by the TV industry’s accolade of Channel of the Year, bestowed at the Edinburgh International Television Festival in August. That vote may have been influenced by the industry’s instinctive support for any of its key players seen to be under threat, which has been the perception of Channel 4 ever since a civil servant was photographed last September carrying a document referring to possible privatisation of the channel.

The EU referendum seemingly put paid to that risk, as the Secretary of State who had initiated the process, John Whittingdale, was unceremoniously booted out of his job by Theresa May. His successor, Karen Bradley, is an unknown quantity in terms of media policy, but most commentators doubt her interest in the issue, not least because Channel 4 has nearly always enjoyed a remarkably wide level of political and public support. Its editorial stance has long appealed to Guardian readers and parties of the left, whereas its championing of independent television production resonates with Conservative free marketers.

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This dual attraction is rooted in Channel 4’s creation. Through the 1970s, two versions of a fourth TV channel had been espoused: an ITV2 – which would have allowed ITV to compete head-to-head with the BBC’s two channels – and an independent alternative, publicly owned, commercially funded and encouraging new entrants to television (guess which version the BBC supported).

In 1977, heavily influenced by one of its members, the Labour MP Phillip Whitehead, a Committee of Inquiry into broadcasting chaired by Lord Annan recommended an Open Broadcasting Authority to occupy the vacant fourth terrestrial channel: a variation of the idea for a National Television Foundation conceived by Whitehead’s former colleague at BBC TV Current Affairs Group, Anthony Smith, latterly ensconced as an academic at Oxford.

However, the OBA found few political friends, not least because of the difficulty of financing it, and the Conservatives entered the 1979 election with a manifesto commitment to launch ITV2. Yet within days of Margaret Thatcher’s first victory at the polls, the left-wing TV union, the ACTT – a natural supporter of an ITV2, with its promise of entrenching ACTT power within the industry – surprisingly voted for an independent Channel 4.

Encouraged by this, a small group of would-be independent producers (whose numbers then could be counted on the fingers of two hands, such was the hostility to the idea of independent production from within the established broadcasters) launched a lobbying effort. The primary targets were the new Home Office ministers, Willie Whitelaw and Leon Brittan, as well as the Tory free market guru, Sir Keith Joseph, to whom they outlined their model of a lean publisher-broadcaster, funded by advertising sold on its behalf by ITV, and gathering much of its programme supply from low-cost, fresh-start production companies, who would bring new ideas and new techniques to the industry.

The ministers were persuaded. So, too, was the regulator that would supervise the fourth channel, the Independent Broadcasting Authority (which had previously endorsed ITV2). By 1980, a bill was ready, which set out the new broadcaster’s remit as essentially being innovative and educative, providing an alternative to ITV (and only ITV), and sourcing a “significant proportion” of its programme supply from the nascent independent production sector. “Significant” was taken to mean at least 15%, with the rest presumed to come from the ITV companies – nobody, including Jeremy Isaacs, Channel 4’s first Chief Executive, imagined that independents would become the predominant supplier of content.

To begin with, Channel 4 was funded by a subscription from the ITV companies, in return for their retention of the monopoly on TV advertising. As the subscription was deductible from ITV’s penal special taxation system, the levy, the cost of Channel 4 in its initial years was actually primarily borne by the Treasury. Flourishing under the Thatcher and Major governments, Channel 4 saw off the first suggestions of privatisation. This was thanks to its Tory chairman, airline entrepreneur Sir Michael Bishop, inveighing to a Tory premier against the wicked desire of private companies to pay dividends – an argument still being deployed 20 years later.

Channel 4 managed to escape from the unhelpful embrace of ITV and win the right to sell its own airtime (whose value had been cynically suppressed by the ITV sales teams). With ambitions to expand its operations, it also persuaded the incoming Labour administration to release it from the statutory constraints preventing it from spending its surpluses on anything other than the core channel.

Soon it was splurging hundreds of millions of pounds on buying and launching new businesses – such as film distribution, subscription-funded TV channels, radio stations and horse-racing ventures. Most of the money was lost, but by 2002, the newly invented Channel Four Corporation had settled on a portfolio of free-to-air channels – Film4, E4, More4 – to supplement its public service offering. Channel 4 itself had developed its rudimentary original statutory duties into a complex remit of programming quotas, enforced by its regulator, the Independent Television Commission (successor to the IBA).

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This set of obligations – much more detailed than the three objectives set out in the original legislation – became the famous Channel 4 “remit”, developed over 20 years by successive management teams, of which the most influential was the first. The emphasis on education (which was allocated 15% of the total budget), on multiculturalism and on support for the arts and film (though these two were not expressed directly in quota terms) came from Isaacs. Not just ethnic minorities, but social minorities – especially the gay community – came to see Channel 4 as their natural home. Channel 4 is now famous for its coverage of the Paralympic Games, but Channel 4’s opening night in November 1982 was built around its first Film on Four, Walter, starring Ian McKellen in a drama about a man with a learning disability.

The quota regime evolved organically as a formalisation of Channel 4’s actual output. The template for a long-form early evening news, controversial current affairs programmes and documentaries, high-falutin’ arts and discussion programmes (Brook’s Mahabharata, Ignatieff’s Voices), feature films (My Beautiful Laundrette, Four Weddings And A Funeral), in-your-face entertainment (The Comic Strip Presents..., The Tube), a range of multicultural programming (Desmond’s, The Bandung File) and swathes of peak-time education (4 What It’s Worth, Equinox) was set in that first decade and consolidated in the second, which actually saw broadcast operas supplemented by specially commissioned ones, such as Thomas Ades’ Powder Her Face and Jonathan Dove’s When She Died: Death Of A Princess.

Because Channel chose to invest in training (committing a higher proportion of its revenue than the BBC managed), that became a licence obligation, too. Eventually, the huge success of out-sourcing nearly all production (apart from Right to Reply) led to the enshrining in legislation of the publisher-broadcaster model for Channel 4.  

By 2001, Channel 4 was required to broadcast every week 4 hours of peak-time news, 4 hours of current affairs, 7 hours of formal education, 3 hours of multi-cultural content and 1 hour of religion. Most of these quotas were comfortably exceeded (education by 5 hours a week): the obligation to supply 330 hours of schools programmes a year was over-subscribed by 235 hours.

60% of its output had to be UK origination (70% in peak-time hours): Channel 4 delivered 69% (82% in peak). 60% had to be first-run (80% in peak). En route to an obligation in 2002 to spend 30% of its budget outside London, Channel 4 spent 29% in 2001.

Like all public service channels, Channel 4 was required to meet a quota of 50% for European productions (of which 10% had to be from independent producers, as part of its wider obligation to commission 25% of its output from such producers): its delivery of these quotas was 73%, 42% and 61% respectively. The unique obligation to spend 0.5% of its revenue on training and development was significantly over-delivered, at 0.7%.

Fast forward to 2016, and we find a very different version of “the remit” on offer. Most of the fixed quotas have disappeared: education, multicultural, religion and training. News and current affairs remain (4 hours a week of each), and Channel 4 claims to deliver 5 hours of current affairs (I defy anyone to find these hours: I have scoured the listings, to no avail). The schools obligation has been reduced to a token 1 hour a year: Channel 4 reports delivery of 27 hours (better than 2014’s 4 hours), but it is not clear where these hours are to be found (certainly not on Channel 4 or any of its portfolio channels).

The origination requirement has been cut from 60% to 56% (but still 70% in peak). There is no longer any obligation to broadcast even a single hour of first-run material, so not surprisingly the proportion of repeats has risen from 39% in 2001 to 60% last year.

The only quota that has increased since 2001 is that for out-of-London production (now 35%, instead of 30%, with delivery at 39%); of which there is now a requirement for production in Scotland, Wales and Northern Ireland to constitute 3%. This minimal obligation (the three nations constitute 18% of the UK population) will rise to 9% by 2020 (2015 delivery was 7%). After 33 years of operations, Channel 4 managed to commission just 7 hours of material from Northern Ireland last year.

Earlier this year, a book of essays was published (What Price Channel 4? Abramis 2016), discussing possible privatisation of Channel 4. It included a contribution from Farrukh Dhondy – one of the earliest of Isaacs’ recruits as a commissioning editor – entitled “Remit, Schmemit”. He observes that “a few weeks watching Channel 4 in 2016 leads inexorably to the conclusion that the ‘remit’ does not exist – I must have missed the Act of Parliament that changed or relaxed it”. Indeed he did: so did most of the rest of us.

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In 2003, the Labour government passed the Communications Act and created Ofcom, which replaced not just the ITC, but three other content regulators, along with the telecoms watchdog, Oftel. The thinking behind this change was that telecoms and broadcasting were converging as technologies, and a converged regulator was therefore needed. In truth, virtually no issue that has emerged since 2003 has required Ofcom to exercise both sides of its supposed expertise. Even with some of the largest clashes on which it has had to adjudicate – such as the complaint from BT (and others) about the wholesale prices Sky charged for its sports channels – Ofcom acted purely as a competition regulator, regardless of the fact that the protagonists were the UK’s leading commercial players in telecoms and broadcasting.

As far as public service broadcasting (PSB) was concerned, the Act has proved to be little short of a disaster. Anticipating that digital technology would enable hundreds of new channels to be launched, greatly increasing competition for the incumbent PSB providers, the Act provided for relaxation, or abolition, of most of the specific content quotas previously imposed on the commercial PSBs (ITV, Channel 4 and Five). They had accepted these in exchange for privileged access to scarce spectrum, “must-carry” status for their PSB services on cable and satellite, and the top slots in the electronic programme guides that featured on all digital televisions.

It was certainly true that the old analogue spectrum had room for only five terrestrial channels, and that Whitehall was keen to retrieve that spectrum, so as to auction it for telecoms use. This would force all broadcasting into a purely digital mode, but the level of risk for the old PSB channels would be mitigated by the launch of a new digital terrestrial transmission (DTT) system, to counter-act the threatened dominance of cable and satellite platforms.

The practical result of this concerted effort by ministers and the old PSBs was to create a new scarcity, in terms of DTT capacity. The PSBs – the BBC and the three commercial providers – were granted special access to the most favourable DTT multiplexes. They used that capacity to wrap a dozen or more digital channels round their original PSB services: remarkably, nearly all the audience losses that the old channels suffered from new competition were recovered by the portfolio channels. Since digital switchover was completed in 2006, the hundreds of satellite and cable channels have actually lost a fifth of their audience share to the PSBs and their portfolios.

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Within the PSB sector, there was an anomaly. The ratio of audience share between Channel 4 and its portfolio channels is almost 50:50 (by comparison, the ITV ratio is 70:30 and Five’s is 75:25). Quite why this has happened is not clear: cross-promotion between the main channel and its siblings inevitably favours the latter, but the balance of content spending between them is roughly 5:1, so the outcome is surprising. Whatever the cause, the result has two troubling consequences.

First, although Channel 4 claims that its remit applies “across all genres and all channels”, it is perfectly obvious that the public service element in its output is overwhelmingly to be found on the main channel. As its audience declines, the effectiveness of Channel 4 as a public service provider diminishes. The abandonment of most quotas has allowed Channel 4 anyway to run down its supply of the programme genres that in the past – before 2003 – it acknowledged were the most important in PSB terms: news, current affairs, documentaries, education, religion, arts, children’s and multi-cultural, on which it used to spend about £150 million a year, or 35% of its programme budget. These days, it tries to pass off drama and comedy as public service genres, but if we ignore this blatant fudge, we can see that spend on core PSB is now about £85 million a year, less than 15% of the programme budget, delivering about 10% of all programme hours. As Channel 4’s audience declines – it is now viewed on average for 10 minutes a day per person – we can calculate that its contribution to consumption of public service content has fallen to less than 1 minute a day per person.

The second problem is Channel 4’s increased reliance on the entertainment channel, E4, as a financial support. E4’s appeal to the 16-24 age group is very strong (it scores fifth out of all channels with that audience), helping it to win an audience share of nearly 2% (compared with the main channel’s 5%). However, it achieves this with perhaps the most cynical schedule of any in public ownership: 75% US acquisitions and 95% repeats. In some weeks it broadcasts up to 150 US sitcom episodes, including up to 70 of The Big Bang Theory alone.

This schedule is in clear breach of E4’s Ofcom licence, which – like all Ofcom licences for broadcasters operating in the UK – requires at least 50% of transmission hours to be European works. The obligation derives from EU directives aimed at supporting European production, and has been incorporated for nearly 30 years into the UK regulatory regime.

When I asked Channel 4 Chief Executive David Abraham about this persistent and deliberate breach of the E4 licence, he murmured words to the effect that Channel 4 “needs the money”. When I pressed Ofcom Chief Executive Sharon White on the issue in August, she just shrugged. One of her predecessors put this down to “favourite child” syndrome, a verdict shared by a former member of the ITC. What Channel 4 does is too important for the regulator to worry about such peccadilloes.

A source at the Department for Culture, Media and Sport wondered whether Ofcom was relying on the exception to the 50% rule written into the directives, whereby they only apply “where practicable”. For instance, Ofcom-licensed UK-based channels relying by definition or default on US content, such as PBS, CNN, CBS Drama, Sky Atlantic and virtually all film channels, including Film Four, would be exempt. But that clearly does not apply to E4, which actually had no difficulty meeting the 50% rule in its early days, when its limited transmission hours included endless amounts of Big Brother spin-offs. After that show ended, and 24-hour transmission started, it just ignored the rule.

Ofcom itself responded in 2015 to the EU consultation on the current directive thus: “the requirements for European works have helped to foster growing investment in European content for a wide range of linear and on-demand television services...without the flexibility the arrangements provide [ie, the “where practicable” exemption], new market entrants would find it much more difficult to establish themselves, and then build investment in European production...we therefore consider the provisions in the directive remain relevant, effective and fair for promoting cultural diversity and European works”.

By no stretch of the imagination can E4 – which launched in 2001 – be described as “a new market entrant”. Indeed, its predatory scheduling and the audience and revenue it generates must add to the difficulties genuine market entrants face in trying to reach the 50% threshold. Arguably, one of the reasons BBC3 failed to achieve wider penetration of the crucial 16-24 market was the difficulty of breaking young people’s addiction to The Big Bang Theory.

Despite their collective success in fending off the challenge of digital competition, the old PSBs have been allowed by the 2003 Act to let their old obligations wither away. ITV has effectively abandoned children’s programmes, arts, adult education and religion, while its documentary and current affairs output is a shadow of its former output. Even drama has been cut back by two-thirds (not that it was ever subject to a quota).

What was once ITV’s core strength – its regional news service – had its budget slashed, during the post-2008 advertising downturn, with ITV effectively telling Ofcom it was walking away from its licence terms, leaving the regulator to choose between ITV merging services across its regional network, or reducing resources in each and every region. Ofcom did not have the wit to demand that ITV re-instate the lost provision once profitability was restored. ITV currently makes profits of over £800 million a year: there has been no re-instatement.

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Displaying an unexpected sense of irony, Parliament also charged Ofcom in the 2003 Act with the duty of monitoring all PSB output (including the BBC’s) and reporting its findings every three years (the results have been so depressing that the coalition government eventually decided to abolish the triennial reporting duty).

In practice, of course, Ofcom has no powers to influence the level of output from the BBC – and even when it becomes the BBC’s external regulator next year, will still lack such powers. But what Ofcom has done is track what it sees as the key indicator of PSB provision – spending on original UK content. This has declined by 20% in the last decade, as much at the BBC as within the commercial sector. Excluding sport, investment in new UK content has fallen from £2.5 billion a year to £2 billion a year. Yet in that decade, the combined revenues of the BBC and the commercial companies have actually risen.

When Ofcom addresses the detail of which genres have suffered most, it lays the blame equally on both sets of broadcasters (although it mostly exonerates the BBC on provision of children’s content, where it is now effectively the sole supplier). In all the other areas of what has traditionally been seen as the key public service genres, Ofcom reports dramatic declines: including a 25% reduction in spend on arts and classical music since 2008, a 77% reduction in formal education, and a 26% reduction in religion and ethics (“provision has all but ceased”).  

Until recently, the BBC treated Ofcom with ill-disguised contempt. When I used to read out sections from these PSB reports at industry conferences, BBC executives would ask me, in all innocence, where such information came from. Next year, Ofcom will take over from the BBC Trust the role of external regulator, overseeing the various service remits for BBC television and radio, as well as enforcing compliance with broadcasting codes. As it happens, Ofcom has built up a good track record in judging code breaches, including those at the BBC, though taking over adjudicating BBC impartiality may stretch its resources.

Where Ofcom has simply no capacity is in performing the role of quality controller. The old ITC – and its predecessor, the IBA – had a cadre of professionals who judged performance at the licensee and individual programme level. Ofcom employs none. It has tried to beef up its content board in anticipation of taking on quality control at the BBC, but that board has just lost its newly appointed chairman, Bill Emmott (former editor of The Economist), because he declined to give up expressing his trenchant views on political issues in print – something Ofcom feared would undermine its rulings on impartiality. Now it must hire at least 60 experienced professionals – perhaps the entire staff of the outgoing BBC Trust? – before the end of April 2017, to carry out its proposed new duties.

Will it use its new powers to encourage, or induce, the BBC to invest more in new programming, especially in the “endangered species”? Judging by its past behaviour with Channel 4, that seems unlikely. Even as it bemoaned the steady decline of PSB, it failed to use its role as licensor and regulator of Channel 4 to bring about change in its programming priorities in any significant way.

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Of course, the 2003 Act did not actually erase public service obligations for Channel 4: indeed, an enlarged version of the original 1981 formula was put in place. Channel 4 was required to provide “a broad range of high quality and diverse programmes which, in particular, demonstrated innovation, experiment and creativity in the form and content of programmes, appealed to the tastes and interests of a culturally diverse society, and made a significant contribution to meeting the need for programmes of an educational nature, and other programmes of educative value; all whilst exhibiting a distinctive character” (section 265 Communications Act 2003).

Ofcom was required to insert this public service remit into the Channel 4 licence. But the primary mechanism for ensuring compliance was no longer quotas (though a few remained), but an annual “statement of programme policy”, formalised in the 2010 Digital Economy Act. The first such statement from Channel 4 ran to 5,000 words. These days, reporting on “media policy” can take up to 100 pages in the channel’s annual report, sometimes to comic effect, as every last nomination for every obscure award is slavishly documented.

Essentially, this is – outside the fixed quotas – self-regulation. Channel 4 helpfully designs and commissions special opinion surveys to establish how well it does, compared with the other public service channels, in perceptions of “innovation, experiment and creativity”. Not surprisingly, Channel 4 performs rather well in these tests, as the other four public service channels are not normally in the business of innovation and experiment.

Equally unsurprising is that these programme policy statements rarely include any quantifiable measures of performance. Sometimes targets are set: but there are no consequences for missing them. As Sam Goldwyn might have put it, these are verbal promises, not worth the paper they are written on. Even those achievements claimed can seem absurd: so the broadcast on the Film4 channel of Kurosawa’s “Seven Samurai” – 60 years after its first release – is cited as a contribution to “diversity”. That category itself has been expanded from the statutory reference to cultural diversity to a catch-all that includes ethnicity, disability, sexuality and even religion.

Small wonder that Dhondy – Channel 4’s first commissioning editor for multi-cultural programming – ruefully acknowledges that “there are reasonable arguments on both sides for reviving a multicultural remit or for re-defining it and calling it something else – but please not DIVERSITY!”

The most egregious breach of the letter and spirit of the Act is the abandonment of educational programming. In the old days of the IBA and ITC, Channel 4 would broadcast a dozen or more adult education series every year, and be required to demonstrate to the regulator their formal educational content. At that time, I had the same task at ITV, as the Director of Programmes for Thames TV, which managed the weekday schedule for the network: the regulator was no soft touch.

Channel 4’s last head of education, Janey Walker, was made redundant in 2010. Schools programming had been successfully finessed out of the broadcast schedule, on the grounds that there were more efficient ways of distributing such content. The statutory duty to “make a significant contribution to meeting the need for...programmes of an educational nature and other programmes of educative value” has been evaded much more cynically.

The education budget has been decimated since the 2003 Act. Nominally, £5 million is allocated to in the Channel 4 budget, and 16 hours of content is shown across the Channel 4 portfolio of channels (compared with well over 1,000 hours a year on Channel 4 alone previously). The executive now in charge of what is deemed education is the head of formats, Dominic Bird, who inherited a teenage-oriented education strategy that was “online and game-focused”, and – using a “Trojan horse approach” – has inveigled some programmes into main channel peak-time (“which requires them to be “not overbearingly ‘educational’”). He is reluctant to attempt infiltrating E4, as “anything that felt too obviously educational would sit particularly uncomfortably on it”. Even so, in a verdict that might surprise Jeremy Isaacs, he enthuses: “I don’t think we have ever been so bold and ambitious with our education content”.

Perhaps Channel 4 is embarrassed by these musings. Astonishingly, in its Annual Report, it claims to have broadcast on the main channel last year, not just the 16 hours of designated education, but 2,757 hours of “education” – which a footnote tells us consists of “programmes (originated or acquired) that are educational in nature” – without specifying how many of them fulfil the statutory requirement that they be “of educative value”.

2,757 hours a year translates into 55 hours a week, over and above news, current affairs and documentaries (which are separately listed). What are these hours? For once, Channel 4’s love of lists and exhaustive exposition of all its achievements fails us. Clearly, a list of these hours exists, but Channel 4 declines to publish it (no doubt fearing endless ridicule by Private Eye for ever after). Ofcom could ask it to publish the list. Silence reigns.

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Does any of this matter? Even Liz Forgan – one of the stalwarts of the early Channel 4 – believes that the age of box-ticking is over, and more sophisticated ways of judging Channel 4’s role as a PSB are needed. I don’t agree with her – look at the outcomes – but I am in a very small minority. The last time Ofcom held a consultation on the Channel 4 licence, primarily focused on the out-of-London quota, barely three dozen people and organisations responded.

And the truth is that Channel 4 still stands out from the broadcasting crowd, with brave, provocative and ground-breaking programming. National Treasure offered a highly intelligent script, fine acting, remarkable cinematography and music, and a persuasive set of outcomes. The channel has built a brand that has particular resonance with younger audiences, including a strong online presence. It may have dropped its licence obligation for spending on training, but this year has invested £1.6 million in its indie growth fund and donated £1.5 million to the National Film and Television School (one of the key driving forces of our creative economy). Even E4 has managed to win an award for a rare venture into experimental comedy with Michaela Cole – Chewing Gum.

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What has placed Channel 4’s performance – especially compared with the pre-2003 era – centre stage has been the revived idea of privatisation, and the promise from ministers that this would only be pursued if it delivered a strengthened Channel 4 remit.

This pledge has provoked disbelief – even hilarity – amongst Channel 4’s many supporters. After all, if the government is trying to extract some cash from a sale of the business, from a new owner who will want to make a profit, what room could there be for investment in the least commercial, public service, part of Channel 4’s output? As the current management succinctly put it – echoing the arguments from Sir Michael Bishop in 1996 – a new owner would want to make a 20% return, which would surely come at the expense of the programme budget.

Curiously, fifteen years ago, the Conservative Party, whilst in opposition, had made a similar pledge as part of its then proposal to privatise Channel 4, using some of the proceeds for “an enhanced remit to deliver high quality drama, current affairs, news and minority programming on its core channel”. The rest of the sale revenues were reserved for a trust to support the arts more generally. Given that the remit in 2001 was far more demanding than it is today, that promise was pretty challenging.

Yet, at the time, I was inclined to believe it. In 2000, when I was Chief Executive of Channel 5, I proposed to Channel 4 that we merge our back office functions, leaving the programme and marketing teams otherwise completely free to fulfil their respective licence obligations. By combining our teams for finance, airtime sales, HR, administration, transmission and acquisition, there were savings of at least £130 million to be made, with which each channel could strengthen its schedule.

Channel 4 rejected my approach at the time, but soon afterwards, a new Chief Executive there – Mark Thompson – raised the issue again, only to be blocked by his board. That was a political decision: what was beyond argument was that two broadcasters of a similar size could obviously make large savings by merging, as well as generate significant synergies. So it was no surprise when Channel 4, a decade later, offered £100 million to buy Channel 5 – only to be marginally outbid by Richard Desmond – and then the same amount to buy the Living TV portfolio of channels, only to be massively outbid, this time by Sky. The economic logic of scale is simply too glaring to ignore.

So it is easy to see how Viacom – the current owners of Channel 5 – could pay between £500 million and £1 billion for Channel 4. The level of savings I envisaged in 2000 would have grown simply as a result of inflation, and Viacom would reap the additional benefit of gaining an airtime sales team, so no longer needing to pay fees to Sky. The savings and synergies would run to at least £200 million a year, and Viacom would also derive the benefit of the £250 million of Channel 4 reserves (no longer needed once Channel 4 is owned by a major media corporation) and a building worth £100 million.   

Such a level of savings would give the government the chance to impose strong new remit requirements: for the first time, the Channel 4 budget could be guaranteed and inflation-proofed, with key ingredients within it, such as news and current affairs, ring-fenced with their own guarantees (the present Channel 4 licence has no actual spending obligations at all); specific commitments to arts, children’s, education and programming for minorities could be created and enforced; a requirement to commission from at least 300 qualifying independent production companies each year, especially those with turnover below £5 million a year, would re-invigorate that sector (currently, Channel 4 commissions from just 164 of them, compared with over 500 in the 1990s); there could be a weekly quota for programmes created by ethnic minority producers and directors.

Whereas fines for failure to perform by a publicly-owned Channel 4 make little sense (they just reduce ability to invest), penalties are entirely realistic to keep a commercial operator in line: perhaps £10 million for a first offence, and £20 million thereafter.

A new owner would have to make sense of a programming paradox. It is a reasonable assumption that “remit programming” attracts fewer viewers than straightforward entertainment, so pushing the overall audience share for Channel 4 closer to 7%, with a stronger mainstream offering, would be as much of a spending priority as fulfilling a tougher remit. Indeed, there is little point in delivering improved public service content if viewership of it continues to fall. That kind of strategic approach – reversing the long-term decline in Channel 4’s audience share – is something a change of ownership could more easily accomplish.

Would a Viacom – or anyone else – take on a tougher remit? Oddly enough, when Viacom bought Channel 5 (now called Five), it volunteered the strengthening of a number of its licence obligations, perhaps to the surprise of Ofcom. The reality is that nearly all the potential buyers of Channel 4 pay little or nothing by way of dividends (something the Conservative document of 2001 also pointed out) – the issue is, not squeezing money out of the Channel 4 programme budget, but growing its revenues and public service salience by re-investing savings achieved through greater operational efficiency.

Perhaps fortunately for the present Channel 4 management, the government has been somewhat half-hearted about privatisation, has never taken up the challenge of issuing a tougher version of the remit and inviting bidders to respond to it, and has lately retreated to a notion of part-privatisation – a concept which delivers none of the benefits of cost savings and synergies, whilst only complicating the task of actually running the channel.

Part of the Conservative problem with their privatisation project has been its supposed rationale: a claimed problem with Channel 4’s sustainability. Yet this diagnosis collapsed at the first hurdle. Not having checked the current status of the remit, ministers failed to realise that it was so perfunctory that it required virtually no cash spend to fulfil – perhaps £25 million a year for news. The history of the last 13 years shows that Channel 4 can reduce its spending in every area of programming if it so chooses, abandon any category of output except news and current affairs, reduce first-run programming to minimal levels, increase the volume of acquired material and place as much cash in its reserves as it likes without fear of any regulatory intervention. By definition, Channel 4 is almost infinitely sustainable.

Indeed, in the absence of ministers forcing Ofcom into a full re-consideration of its relationship with Channel 4, it is hard to see what the regulator would choose to do in order to secure a stronger delivery of public service content from the current management. Ofcom has the power to replace Channel 4’s non-executive directors, but has never used it – indeed, it explicitly declined to become involved in appointing non-executive directors to the new BBC board, ostensibly on the grounds that this would clash with its duty to regulate BBC performance in the future (which is puzzling, as it is already supposed to regulate Channel 4’s performance).

A stronger regulator is the key to delivering a Channel 4 that provides a much better version of public service broadcasting. This month, Channel 4’s Chief Creative Officer, Jay Hunt, revealed that she “cannot imagine” a privatised Channel 4, and its finance director, backing a “genuinely shocking” documentary. Yet for decades tightly regulated, profit-seeking ITV companies delivered hundreds of powerful documentaries and current affairs programmes, because that is what was required by their regulator in order for them to stay in business. It is the idea that any finance director at Granada TV, Thames TV, LWT, Central or Yorkshire TV would have been consulted before the commissioning of episodes of World In Action, This Week, Weekend World, The Cook Report or First Tuesday which is “genuinely shocking”.

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After a year of procrastination by the government over what to do with Channel 4 – a year which Channel 4 claims has destabilized its commercial relationships and undermined staff morale – the pursuit of any kind of privatisation appears to have stalled, with the only rumour emerging from Whitehall relating to a possible re-location of the channel, perhaps to Birmingham, as a counterbalance to the dominance of London in broadcasting (and perhaps a snub to a management deemed uncooperative).   

Then, in September, Channel 4 managed to score a spectacular own goal, by capturing a BBC programme that was approaching “national treasure” status. The Great British Bake Off has – improbably – become BBC1’s most popular series, attracting as many as 15 million viewers for the final stages of its elimination process, in search of the UK’s supposedly top amateur baker.

In the past, Channel 4 has occasionally intervened in the sports arena, taking over England Test Matches, the Paralympics and terrestrial coverage of Formula 1 motor-racing when the BBC was either faltering, or exiting. However, it has – for obvious reasons, given its remit obligation to innovate and experiment – never attempted to poach a rival broadcaster’s established ratings winner.

It had long been known that the indie providing GBBO to the BBC, Love Productions, had very much fallen out of love with the broadcaster that had nurtured the show from its early tentative forays on BBC2. The BBC contract was running out, and Love was perfectly entitled to seek better terms or an alternative outlet (that it is 70% owned by Sky TV suggests that it would always have found a home on Sky 1 in the absence of a satisfactory deal elsewhere).

It is not clear if ITV was invited to bid, but Love decided – in the midst of the current run of the show – to declare dealings with the BBC at an end (despite the Corporation’s offer to double the value of the contract). A call to Channel 4’s Jay Hunt invited an urgent sign-off on a three-year deal at £25 million a year – a stupendous amount for a production that had previously delivered a solid profit when priced at £7.5 million.

What Ms Hunt failed – or never tried, or did not think worth bothering – to establish was whether the foursome of presenters and judges who were an integral part of the production had agreed to transfer to Channel 4. Quickly, the two presenters, Sue Perkins and Mel Giedroyc, announced that they would not be “following the dough”. A week later, one of the judges, the veteran TV cook Mary Berry, also withdrew, citing loyalty to the BBC. As Channel 4 will not be able to broadcast a full series of GBBO till 2018 – thanks to a holdback clause in the BBC contract – there is every likelihood that a BBC baking show involving the three female members of the old team will air in 2017, a full year earlier, further taking the wind out of Channel 4’s sails.

It is not the ineptitude of the capture which is most damaging to Channel 4, however much schadenfreude it might occasion amongst BBC loyalists. It is the scale of the investment – so lavish, so unnecessary, and in pursuit of some other channel’s hit – which has provided fuel for supporters of privatisation such as Lord Grade (who had determinedly fought off any sale when he was the channel’s Chief Executive in the 1990s). How can it make sense to allocate £75 million to a pre-existing format when so much of Channel 4’s old, distinctive remit has been jettisoned on grounds of cost?

The argument might be that the revenue GBBO can generate would recover the investment, over time, and that the programme would deliver a “halo effect” to the rest of the schedule, boosting audiences for the programmes transmitted before it and after it. Even a modest rise in Channel 4’s overall ratings performance would add saliency to its offer to advertisers.

Against that must be measured the risk of the show’s audience falling so far below the old BBC level that it becomes identified as a failure. Even the modest decline in ratings for Top Gear on the BBC since its old presenting team departed has been seized on by the Corporation’s critics, who blamed it for going too far in firing the lead presenter, Jeremy Clarkson, for assaulting a producer who failed to ensure that there was a hot meal awaiting the crew after a long day’s filming.

Ms Hunt could scarcely have chosen a less opportune political time to shower largesse on the producers. Her rationale – that she was “saving the show for free-to-air viewers” – rang particularly hollow, as the pay-TV company that owns a majority of Love could have secured that status by simply instructing Love’s executives to accept the BBC offer of £15 million.

Even Ofcom’s eyes must have been opened by the lavishness of the GBBO contract. Only two years ago, Channel 4 had assured Ofcom that it could not afford to commit to spend anything more than 9% of its budget in the Nations. When even Ofcom’s Northern Ireland advisory body demurred at this, Channel 4 insisted that there were simply not enough suppliers in the province to justify more than the £1.2 million it spends there each year.

Northern Ireland, of course, basks in the fame of being selected by the US pay-TV giant, HBO, as the primary base for Game of Thrones, the most successful and expensive drama series in television history. BBC2 managed to base two of its most acclaimed recent drama series – The Fall and Line of Duty – in Northern Ireland, without sacrificing any technical or creative quality. Indeed, one of the earliest of Channel 4’s drama successes, the very fine Lost Belongings by the late Stewart Parker, was based there too.

Perhaps the result of this fiasco will be a decision from Karen Bradley to require Channel 4 to move, not to Birmingham, but to Belfast. If Viacom were to buy Channel 4, probably 500 out of the 800 staff would lose their jobs, but most would quickly find alternatives in the buoyant London media market. But Belfast?

About the author

David Elstein is Chairman of openDemocracy's Board. He is also Chairman of the Broadcasting Policy Group. 

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