Credit: Thomas Nugent/Geograph

Document blunder reveals Channel 4 could be privatised

An official is photographed with papers exploring 'ownership options' for Channel 4. Would privatisation be selling the silver or the best of both worlds?

by Adam Gale
Last Updated: 25 Sep 2015

As anyone with a habit of leaving their password scribbled on post-it notes has no doubt discovered by now, data compromises aren’t always the work of teams of nerds toiling away in hi-tech Russian boiler rooms. The old-fashioned glimpse is still effective, as a government official discovered yesterday when photographed entering Downing Street with sensitive documents about the future of Channel 4.

The picture, by Steve Back, reveals the government is considering strategies for ‘extracting greater public value from the Channel 4 Corporation (C4C), focusing on privatisation options in particular’, only a month after Secretary of State for Culture, Sport and the Media John Whittingdale said its ownership was ‘not currently under debate’. A month’s clearly a long time in politics.

In response, Whittingdale’s department confirmed it was considering a ‘range of options’, while Channel 4 seemed to have only one in mind. The state-owned organisation, which unlike the BBC funds itself through commercial advertising, said its ‘not-for-profit model enables it to deliver significant public value to viewers and the UK economy’. In other words, leave us alone.

Would privatisation really increase Channel 4’s ‘public value’? On the surface, it seems as though the Treasury would be cashing in on an estimated £1bn to sell the business, but that would come at a price to consumers. Channel 4 currently reinvests any surplus, so to make a profit it would either have to cut costs or raise revenues by selling more adverts or increasing its market share.

Free markets do, of course, produce efficiencies that bureaucrats can never achieve, but it seems unlikely that ‘streamlining’ or increasing commercial breaks would produce a much better outcome for the public.

If Channel 4 increased its market share by airing shows with a wider appeal, then that might be a different matter, but this goes against its remit to cater to minority groups and take risks. As the leaked document talks about the importance of ‘protecting [Channel 4’s] ability to deliver against its remit’, this seems to create a problem.

Much like the railway operators, a privatised Channel 4 wouldn’t really be operating in a free market at all. Its strategy would be in large measure dictated from on high, according to non-commercial objectives. As a result, the advantages of private management would largely bypass it.

This isn’t to say that a privately owned Channel 4 would necessarily deliver worse ‘public value’ (what that actually means is clearly a matter of definition, so let’s assume it’s still connected with the social objectives outlined in the remit), but it does mean it probably wouldn’t do it any better.

Indeed, Channel 4 boss David Abraham recently spoke of the risk of ‘sleepwalking... into a different country’, should Channel 4 or ITV be sold to an American broadcaster.

On the other hand, the debt and the number of public sector employees would go down a touch, which George Osborne would undoubtedly say delivers public value (not sure Jeremy Corbyn would agree). The wider and much-revitalised privatisation-nationalisation debate will rage on, but for Channel 4 opening its doors to shareholders is now looking a distinct possibility.

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