The culture secretary has recommended the government drop its plans to privatise Channel 4, according to a leaked letter that suggests ministers will instead push the broadcaster to move jobs out of London.
Michelle Donelan set out her plans for the climbdown in a document sent to the prime minister, Rishi Sunak, which states that there is little appetite for privatisation of the broadcaster among MPs.
She said she “concluded that pursuing a sale at this point is not the right decision and there are better ways to secure C4C’s [Channel 4 Corporation’s] sustainability and that of the independent production sector”.
Donelan said Channel 4’s role in supporting the independent production sector “would be very disrupted by a sale at a time when growth and economic stability are our priorities”. Although the letter, obtained by the News Agents podcast, has not been signed off by Downing Street, it is the clearest indication yet that the government intends to once again abandon plans to privatise Channel 4 – having reached a similar decision in 2016.
The proposal to take the broadcaster out of public ownership was announced by Donelan’s predecessor Nadine Dorries, despite near total opposition from the British media industry. There were repeated suggestions, including from some Tory MPs, that the proposal was a politically motivated attack on Channel 4 as part of a series of “culture war” policies targeting the media under Boris Johnson’s leadership.
At least £2m of government money has already been spent on the privatisation plans, including hiring investment bankers.
Dorries criticised the policy change on Twitter, saying it would now be “almost impossible to face the electorate” at the next general election. The former culture secretary lambasted Sunak’s government, saying: “Three years of a progressive Tory government being washed down the drain. Levelling up, dumped. Social care reform, dumped. Keeping young and vulnerable people safe online, watered down. A bonfire of EU leg, not happening. Sale of C4 giving back £2bn reversed. Replaced with what?”
She added in a second tweet: “Where is the mandate – who voted for this?”
Channel 4 is owned by the state but funded commercially, largely through advertising. Unlike other broadcasters such as ITV, Channel 4 is required to reinvest its profits into making distinctive programmes. It is also barred from making its own programmes, meaning it relies on a network of independent companies to make shows.
Rather than selling the channel, Donelan suggests, Channel 4 should be allowed to make more shows in-house and borrow more money from the Treasury as this would give it “the flexibility to make some of its own content and diversify its revenue more effectively”. However, this technical change could raise concerns among production companies who could lose out.
The minister also said Channel 4 had committed to moving 600 staff out of the capital, raising the prospect the broadcaster could choose to sell its central London headquarters, which have been valued at up to £100m.
Other proposals include requiring the Channel 4 board to set out a clearer path to long-term sustainability in a world beyond traditional TV. In common with other broadcasters, Channel 4 is struggling with the long-term decline of television audiences and is still heavily reliant on television advertising for its income. Years of debate over privatisation has also sapped resources and occupied the attention of senior executives.
Lucy Powell, the shadow culture secretary, said the privatisation debate had been “a complete waste of everyone’s time”. She said: “Our broadcasting and creative industries lead the world, yet this government has hamstrung them for the last year with the total distraction of Channel 4 privatisation.”
John McVay, the chief executive of the independent producers’ association, Pact, said: “The government has made the right decision to hit the stop button on Channel 4 privatisation. It was always a solution in search of a problem that didn’t exist.”
The government may have found there was less support for taking on Channel 4 than it expected, given the appetite on the Tory benches for criticising the BBC and freezing the licence fee. There was unexpectedly strong opposition from many Conservative MPs who feared small businesses in their constituencies would be hit by Channel 4 privatisation, although others raised complaints about perceived leftwing bias in the broadcaster’s output.
When the government announced plans last year to privatise the channel it said it was so the broadcaster could better survive in a media landscape dominated by the likes of Netflix and Amazon. But Channel 4 always insisted it could be financially sustainable on its own.
A spokesperson for the Department for Digital, Culture, Media and Sport said: “We do not comment on speculation. The DCMS secretary of state has been clear that we are looking again at the business case for the sale of Channel 4. We will announce more on our plans in due course.”
