Channel 4’s dependence on ad revenue concerns Government, says minister

A minister has said that the Government is “concerned” about Channel 4’s ability to stop relying on advertisement revenue amid a “tougher” business climate.

Sir John Whittingdale MP was appearing before the Culture, Media and Sport Committee on Tuesday as the Draft Media Bill is scrutinised.

It comes as the broadcaster reshuffles its schedule after a “downturn in the ad-market” which it relies on to generate money to commission shows.

Minister for media, tourism and creative industries Sir John was asked about whether Channel 4 will make its own shows under the new Bill, which will relax the publisher-broadcaster restriction that stops the broadcaster from creating content in-house.

He said: “We’re not going to say they have to have a minimum of in-house production, they can have zero in-house production if they wanted.

“This is a freedom, it does not mean you have to exercise the freedom.

“We have been concerned about the dependence of Channel 4 on advertising revenue and their inability to diversify in the way that ITV has been so successful… so this gives them this opportunity to do so.”

The broadcaster’s flagship programmes are currently made by independent production companies, with The Great British Bake Off by Love Productions and Gogglebox by Studio Lambert.

Sir John was also asked if Channel 4 would be bailed out by taxpayers and did not rule the move out.

He said: “The Government would not like the idea of having to step-in and provide taxpayers money.”

He also said: “Channel 4 is a small player in a world of big, big players and they have done remarkably well, particularly in recent years.

“We know that the climate at the moment is a lot tougher than it has been.”

Sir John also said “all commercial broadcasters” are under “increased pressure”.

“They are operating in a very challenging environment,” he added. “(In-house commissioning) is not a silver bullet, it’s not going to suddenly remove the pressures… we hope (it) will sustain them.”

In June, Channel 4’s content chief Ian Katz wrote a letter to suppliers acknowledging challenges for the broadcaster in the advertising market.

He wrote: “Our objective through this period has been to preserve planned production. Regrettably we’ve had to rest or not proceed with a small number of shows before they were financially greenlit.”

Mr Katz said the broadcaster will be commissioning “relatively little over the summer months” outside of digital and current affairs.

However, he said the challenges are “cyclical and the product of weakness in the wider economy impacting the advertising market”.

A spokesperson for Channel 4 said: “As Sir John Whittingdale told the committee, Channel 4 is an amazing success story led by a strong management team.

“As our annual report and results will show later this month, our business model is strong, sustainable and heading in the right direction.

“Our future is not in doubt.”