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Channel 4 is to be allowed to make up to 75% of its content in-house, in line with rival public service broadcasters, under the government’s privatisation plans.

In its White Paper, the government outlines its vision to “rewrite the rules” of public service broadcasting, which would include a privatised C4 that scraps its publisher-broadcaster model.

The plan is moving forwards despite 96% of the 55,000-plus responses to the consultation calling for no change to C4's current model - with an estimated £2.5bn price tag hanging over the broadcaster. 

The government intendes to legislate as soon as possible for the broadcaster will be obliged to spend at least 25% of its original commissioning budget with qualifying indies, the same quota in place at the BBC, ITV and Channel 5.

The paper makes clear the government position that C4 has “fulfilled its original mission” of stimulating the UK independent production sector since its formation in 1982, and now finds itself at “a unique turning point”.

It added: “Access to capital and the freedom to make and own content are important tools Channel 4 will need to succeed in the future, create new revenue streams and compete.

“The government believes the required investment to do this at scale and pace is best provided under private ownership, rather than asking taxpayers’ to bear the associated risk.”

C4 reacton

Speaking at the Creative Cities Convention, C4 chief creative officer Ian Katz voiced fears that a private owner would be under no obligation to exceed a minimum target.

They would, he said, "have a whole roomful of accountants and lawyers trying to work out how to keep just within the letter of that law, not to embrace its spirit as we do now".

Sticking to that minimum would, he said, slash C4's spend with suppliers by £300m a year, with nations and regions particular affected.

C4 is set to order 66% of its hours from outside London this year - almost twice its 35% minimum quota and equivalent to an additional £86m going outside London last year.

“Would a new, private owner that buys Channel 4 looking for ‘synergies’ and ‘deduplication’, commission 66% - at greater cost to their shareholders - or would they commission 35% and not a minute more?,” Katz posited.

Industry reaction

Industry bodies continue to protest the government’s plans as “cultural vandalism”.

Bectu’s Philippa Childs declared the proposals are driven by “ideology, not public interest”.

She added: “There could not be a worse time to introduce further uncertainty for the creative industries, who were among the hardest hit by the pandemic, and continue to face a chronic skills shortage.”

NUJ national broadcasting officer Paul Siegert said: “It is important if the privatisation goes ahead then there are safeguards put in place. We need cast iron guarantees that whoever buys Channel 4 will have to commit to keeping the much respected and award winning one-hour nightly news programme.” 

Pact chief executive John McVay warned that the quota’s impact could be even worse to the indie sector than he had initially feared.

Based on ITV’s current in-house operation, which makes two-thirds of the broadcaster’s content, Pact’s previous forecast for C4 estimated that £3.7bn of revenues could fall out of the production sector in the next decade.

“If a new owner were able to operate with a quota as low as 25% then the impact on the indie sector will be even more detrimental than we feared and will put smaller businesses and those based outside London particularly at risk,” said McVay.

Writing in Broadcast, minister for media, data and digital infrastructure Julia Lopez sought to allay fears about C4’s privatisation by stating that the plans would free the broadcaster from the “straitjacket of public ownership”.

She writes: “It is and will remain a PSB, just like ITV and Channel 5 which are privately-owned and hugely successful. But we will remove the restriction which stops it from producing and selling its own content so it can diversify its revenue streams and improve its long-term sustainability.

“Whoever buys the broadcaster will inherit equivalent obligations to what it is subject to now - a requirement to support regional production outside London and England, commission a minimum volume of shows from independent producers, and to provide news as well as the original, innovative and risk-taking content it is known and loved for.

“And we will look to use some of the proceeds from the sale of Channel 4 to deliver a new creative dividend for the sector.”

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