Rt Hon John Whittingdale
There is a lot in the Opposition motion with which I agree, particularly its drawing attention to the success of our creative industries and our broadcasting sector and to the benefits that Channel 4 has brought, but it is because I want to see the continuation of Channel 4’s contribution to the creative sector that I believe the Government’s policy is right and will ensure that Channel 4 can continue to thrive.
As has been pointed out, Channel 4 was created by Margaret Thatcher’s Government. There were two principal objectives. The first was to cater for minority audiences that were not being properly provided for at that time. The second was to act as a catalyst to what was then a barely visible independent production sector. Since that time, the landscape has changed dramatically. If we look at the range of choice now available to viewers, we see huge numbers of channels providing a wide and diverse range of content. We also see the spend by those channels. A lot of them are not British, but they are spending money in Britain. Just to give one example, Apple TV recently came to my constituency of Maldon to make “The Essex Serpent”, which I thoroughly recommend to those who have not yet seen it. Minority audiences are now being catered for, but of course Channel 4 should continue with that remit and continue to meet it.
The independent sector has absolutely taken off since Channel 4 was created and is now making programmes that are enjoyed right across the world. However, it is true, as one or two hon. Members have pointed out, that the spend of Channel 4 has declined. I want to cite quickly the latest Oliver & Ohlbaum UK TV production survey for PACT—the Producers Alliance for Cinema and Television—which is the independent production sector. In 2020, spending on independent producers was £508 million by the BBC, £356 million by ITV, £210 million by Channel 4 and £223 million by the others, including Sky and some of the streamers.
Just in case people say, “Ah, but Channel 4 continues to support the small indies”, I point out that 40% of the BBC’s spend is on independent production companies with a turnover of less £10 million, compared with 27% of ITV’s, 11% of Channel 5’s and just 10% of Channel 4’s. Yes, Channel 4 does make a contribution, but the independent production sector is actually now so successful that it no longer necessarily needs the support it was previously given. Indeed, I think there is a case for tweaking the remit so that Channel 4 is perhaps returned to its original purpose of focusing on growing companies, not just on commissioning from production companies that are already hugely successful.
The reason why it is right to look at the future of Channel 4 now is that the original model set up, as a commissioner and publisher-broadcaster wholly dependent on advertising, is going to come under increasing strain. Yes, Channel 4 did well last year in that it survived the pandemic. It did so because it cut the programme budget by £140 million and its drop in revenue was not quite as big. As a result, it made a larger profit, but it did so only by slashing the programme budget. That was a sensible thing to do, but it should not be interpreted as Channel 4 thriving and not being under huge pressure.
We know that that pressure is going to increase. Advertising is steadily migrating online. Digital advertising is becoming overwhelmingly the major spend by the advertising industry. As the Secretary of State pointed out, those that want to spend on TV advertising have.
ITV, Channel 4, Channel 5 and Sky to go to at the moment, but the streaming services are also going to open up to advertising. Netflix is talking about taking advertising and Disney is talking about taking advertising, so the competition for advertising is going to get ever greater and the diversion of revenue to digital media is also going to continue.
Channel 4’s revenues are going to come under increasing strain at the same time as the cost of production is rising steadily and there is a shortage of skills. As has been pointed out, there are potential benefits from privatisation, and the hon. Member for Cardiff West (Kevin Brennan) referred to the difficulties that might be encountered in the House of Lords. To quote the last House of Lords report on Channel 4:
“The potential benefits of privatisation to C4C’s sustainability are increased access to investment in programming, content partnerships and technology through access to capital. This would enable C4C to diversify its revenues, enhance its sustainability and be more ambitious internationally.”
I could not have put it better myself.
I want to counter those who suggest that this somehow a vendetta against Channel 4 because some people may not like some programmes. I completely reject that. I remain a fan of Channel 4 News, even though it annoys me intensely on occasions. It is important that we have plurality in our news provision, and Channel 4 News is a professional news provider. This is not just about raising money for the Treasury. The reason behind privatisation is that the Conservative Government whose predecessor created Channel 4 want Channel 4 to go on succeeding, but under the present change in the landscape, it needs a different funding model and the access to capital that the private sector can provide.