Channel 4’s hopes of a reprieve from privatisation have risen sharply after new Culture Secretary Michelle Donelan cast doubt on Government plans to sell off the broadcaster.
In her first public comments since being appointed by Liz Truss, Ms Donelan said she was re-examining the “business case” for privatising Channel 4, to make sure “we still agree with that decision”.
Her comments appear to mark a significant softening in the Government’s approach and give C4 hope that, unless Ms Donelan suddenly changes direction, the sell-off could be taken off the agenda indefinitely.
Channel 4 executives, anxious to avoid saying anything that could provoke ministers into reiterating their commitment to privatisation, steered clear of commenting after the Culture Secretary’s remarks, but industry insiders say the sell-off is now much less likely, at least in the short term.
Privatisation was due to be the central plank of a Media Bill to be presented to Parliament this autumn. The Bill is expected to go ahead but Ms Donelan’s comments suggest the sell-off would no longer form part of it.
The shift in attitude is likely to be driven by Ms Truss’s emphasis on driving economic growth. Anything that threatens that is likely to be frowned upon by Downing Street, and C4 has made a strong case that jobs would be better protected by leaving the organisation as a public service broadcaster that covers its costs.
Ms Donelan said the Prime Minister also wanted the business case reviewing. Ms Truss has told Cabinet ministers they have the autonomy to drop legislation proposed by Boris Johnson’s administration if the measures do not contribute to the Government’s focus on economic growth.
John McVay, chief executive of Pact, the trade body for independent TV and film production companies, said: “Privatising Channel 4 would do the opposite of driving growth, endangering the future of thousands of British production companies and endangering the future prospects of a thriving industry which has a presence right across the country.”
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The decision to take Channel 4 out of public ownership had been announced by Ms Donelan’s predecessor Nadine Dorries, who led the move during her tenure under Mr Johnson’s leadership.
“It literally makes no sense to try and find a solution to a problem that doesn’t exist and that is why I am delighted that the new Culture Secretary has committed to re-examining the business case,” said Mr McVay.
The plan had been widely condemned by television producers, with analysts predicting that a privatised Channel 4 would face 50 per cent cuts to its £660m programming budget, threatening its ability to commission innovative shows such as Gogglebox and Aids drama It’s A Sin.
In contrast to Ms Dorries, who was accused by C4 supporters of pursuing an ideological y-driven sale, Ms Donelan told Radio 4’s Today programme: “I’m the type of politician that bases their decisions on evidence, that bases their decisions on listening and that’s what I will be doing over the coming weeks.
“We are looking especially at the business case for the sale of Channel 4 and making sure that we still agree with that decision, and that is what I am doing.”
Channel 4, which celebrates its 40th anniversary in November and is worth around £1bn, hopes ministers will look again at its alternative plan to privatisation.
The publicly owned, advertising-funded broadcaster’s plan could lead to the sale of its £100m London headquarters and would almost double the number of staff working outside the capital.
A spokesperson said: “Channel 4 looks forward to working with the new Secretary of State as she examines options for Channel 4.”
The Government had previously said Channel 4 needed a new owner with deep pockets to allow it to compete with streaming giants, since broadcast TV advertising faced long-term decline.
BBC licence fee review ‘in weeks’
Ms Donelan was less emollient towards the BBC, saying a review into the licence fee’s future would begin “in the coming weeks.”
She has previously said the licence fee should be scrapped.
Declining to confirm if that was still her view, Ms Donelan said rival TV services from streamers such as Netflix and Amazon raised questions about whether “the current model that the BBC uses is actually sustainable in the long term and is providing that choice element to the general public”.
She told Sky News: “It is no secret that I have been a long-term sceptic of the licence fee and that we need to make sure that the BBC is sustainable in the long term. So I’m looking at this in the round.”
Ms Donelan could revive a plan from the Department for Digital, Culture, Media and Sport – delayed by Mr Johnson’s departure – to set up a year-long review of the licence fee, charged with finding alternative funding mechanisms.
She praised the coverage of the Queen’s death and funeral by both the BBC and Sky, saying: “It showed the true value of the BBC but for me that means it’s even more important that we make sure the BBC is sustainable in the long term.”
The BBC said it would make its own proposals to the review, which would examine whether the licence fee could be replaced by a household levy linked to council tax bands and if a Netflix-style subscription would raise sufficient revenues to fund the BBC’s public service role.
In January, Ms Dorries announced that the licence fee would be frozen at £159 for the next two years until April 2024.
She said she wanted to find a new funding model before the current deal expires in 2027 as it was “completely outdated”.
Ms Donelan also said that the Government would be bringing the Online Safety Bill back to the Commons “as soon as we possibly can”, but she admitted there was new work being done on the Bill relevant to free speech concerns about a provision for “legal but harmful speech”.
