Channel 4 Privatisation

Julia Lopez Excerpts

Tuesday 14th June 2022 Commons Chamber

[The Minister for Media, Data and Digital Infrastructure (Julia Lopez)]

I welcome the chance to close this debate on the importance of our much-loved cultural institutions, the future of UK broadcasting and the plan to sell Channel 4. I thank hon. Members for their contributions and thoughts.

The motion rightly recognises the role that our broadcasters play in bringing our nation together. There is no better example than the absolutely extraordinary coverage of Her Majesty’s platinum jubilee celebrations. I echo the Secretary of State’s tribute not only to our fantastic DCMS officials, the royal household and our broadcasters for the jubilee coverage, but to every person who participated in the exceptional showcase of British talent, from the glorious eccentricity of the pageant and the precision of the military parades to the musical power of Saturday’s concert and its innovative production, which included breathtaking light displays around Buckingham Palace, complete with drone corgi. It was a magical, delightful, magnificent kaboom of creativity.

I confess that I read the motion with a wry smile, because the hon. Member for Manchester Central (Lucy Powell) has been teasing and tantalising us with Labour’s patriotic pitch in the media for a couple of weeks now. Today, we saw it on the Floor of the House. During the glorious jubilee, the penny finally dropped for the Opposition that British people actually feel rather proud of our country. The hon. Lady has flogged to her leader the idea that the privatisation of Channel 4 is just the wedge issue that Labour needs to convince voters, after five years of campaigning for Comrade Corbyn to be Prime Minister, that it is the party of our most cherished institutions. “We are the patriots!”, she cheers from the Front Bench.

The trouble is that our plan for Channel 4 is not some ideologically driven attempt to dismantle all that is great about British broadcasting, no matter how hard the hon. Lady has tried to mischaracterise it today. It is part of an ambitious and considered strategy to ensure that British public service broadcasters not only survive in a very rapidly changing market, but grow and continue to be relevant to British and global audiences for many years to come, producing the kind of content that delights and informs viewers, underpins our cultural and democratic life and, critically, generates economic growth across our country. The structure of Channel 4, the sustainability of the licence fee and the diminishing value of linear prominence are all issues that have been knocking around for many years, but, as has been discussed at length today, market changes have injected real urgency into this debate, and we will not allow the can to be kicked down the road any further when the future of our public service broadcasters is at stake.

[Kevin Brennan]

I agree with the Minister on prominence, and in fact the Government should have acted sooner, as I called for them to do several years ago. She talks about kicking the can down the road, but what will happen after 10 years under her plans? Is she not kicking the can down the road for the future of this public service broadcaster by saying that in 10 years’ time anything can happen?

[Julia Lopez]

I can account for what the Secretary of State and I have done within our roles, and I think we have pushed forward an extremely ambitious set of reforms in the short time we have been in DCMS. This is an exciting time to be in public service broadcasting. I always thank the hon. Gentleman for his contributions because I know he has expertise in this field.

It is this Government and this Secretary of State who have decided to act, bringing forward a comprehensive package of reforms to support our PSBs through the first broadcasting White Paper in 20 years. It is the next step in a long history of support for our creative industries. It was a Conservative Government—under Margaret Thatcher, no less—that established Channel 4 in the 1980s to stimulate independent production and distinctive content. It has worked, and then some. It was a Conservative Government that encouraged Channel 4’s move to Leeds to spread the benefits of the creative sector beyond London. It worked. And it is a Conservative Government that are tackling the limitations of Channel 4’s ownership structure in this new broadcasting landscape, redirecting sale proceeds into a creative dividend to address the skills challenges of now.

Let me just touch on those limitations, because it is important to remind the House of them. Channel 4 is a fantastic broadcaster that has great management, innovative programming, high quality journalism and a diverse audience, but it is uniquely challenged in two ways. First, the publisher-broadcaster restriction means that it cannot own its intellectual property, so it finds itself reliant for 74% of its income on linear TV advertising revenues. Such revenues have fallen 31% sector-wide between 2015 and 2020, and that trend is set to accelerate as audiences move online and change their viewing habits.

[Sir Peter Bottomley]

Are those the most recent figures that the Department has? Many of us have been asking Channel 4 what its revenues were in the year that finished last year, and the growth in its digital advertising might also be something that the Minister would like to share with the House.

[Julia Lopez]

We would be very keen to get more information on Channel 4’s business at the moment, as it has been rather difficult to extract.

Secondly, should Channel 4 need to borrow money to keep up with the content investment of rivals, that borrowing would sit on the public balance sheet. In the light of those fundamentals, we are not going to apologise for asking the serious and responsible question as to whether this ownership model and structure is the right one for today’s broadcast challenges. That is something that the Secretary of State outlined today, and it has been expertly set out by my right hon. Friend the Member for Maldon (Mr Whittingdale).

I understand why hon. and right hon. Members want reassurance on this plan, and I want to provide it, but before I turn to some of the points raised this afternoon, I want to tackle some of the outlandish assertions in the article by the hon. Member for Manchester Central in The Yorkshire Post today. She claims that our selling Channel 4 could

“kill off independent film production”.

Let us set aside the fact that we believe any new owner would want to maintain Film4, for all the reasons she cites on its value. She completely underplays the strength and depth of the UK’s booming film industry, ignoring all the other players who support it, including the British Film Institute, with its own film fund, the UK Global Screen Fund, into which the Government channel £21 million to promote and distribute UK film around the world, and the fact that our film sector is doing so well that it cannot keep up with the demand for skills and studios.

The hon. Lady says that the sale of Channel 4 will lead to the move of more jobs back to London. I remind her that the BBC has committed to increasing its spend across the UK, that non-London production spend will remain in Channel 4’s remit and that ITV, Sky and Channel 5 all have large operations beyond the capital. There are so many centres of excellence outside London in our production sector that there are huge incentives to keep investing in our regions. She goes on to denigrate channels that are motivated by what she appears to see as a dirty word, profit, over public service. I wonder if she understands that those two things are not mutually exclusive. ITV and Channel 5 are all privately owned public service broadcasters. Indeed, since Channel 5’s sale to Viacom, it has gone from strength to strength, producing some fantastic, distinctly British content. As detailed in the White Paper, she will also understand that Channel 4 will remain a public service broadcaster, with quotas for independent production and the remit protected. We believe that getting private capital into the organisation will allow it to commission more, not less.

I now turn to the contributions of others. My hon. Friend the Member for Folkestone and Hythe (Damian Collins) made the excellent point that Channel 4 itself has suggested a joint venture as a way forward, which would change the relationship with the independent production sector. Implicit in that is that the status quo cannot hold because of the changing dynamic of the market—the strong headwinds he cited—with the shift to online, inflation in production costs and so on.

The hon. Member for Ochil and South Perthshire (John Nicolson), in his waspish speech, suggested that we are trying to make Channel 4 like Netflix or Amazon. That is not the case. We are saying that those businesses are changing the market, and we need to equip Channel 4 to deal with that.

The Father of the House, my hon. Friend the Member for Worthing West (Sir Peter Bottomley), suggested that we the taxpayers, as owners, should listen only to Channel 4 on whether it wants to change. I refer him to the absolutely fascinating contributions from panellists to the Lords Communications and Digital Committee inquiry on the licence fee, and the challenge they cited about small-c conservatism in media organisations.

My hon. Friend the Member for Aberconwy (Robin Millar) touched on this in his superb speech, including on the reticence we often find in organisations about changing and trying to come to terms with some of the challenges they face. I think there is an urgency to this debate on sustainability that we are taking on. He also mentioned Channel 4’s vulnerability to shocks because of its structure.

I enjoyed the speech of the hon. Member for Cardiff West (Kevin Brennan). It was fun, but it was a wholly inaccurate artistic interpretation of the advice of officials who have provided extensive analysis of some of the market dynamics that they think provide a real challenge here. Incidentally, I sometimes find myself imagining alternative scenes in the Opposition offices, with the shadow Secretary of State saying, “Do you know that Channel 4 is the only broadcaster capable of keeping the film, TV and creative industries and the regions going, and also producing content that audiences actually like?”

The Chairman of the Select Committee, my hon. Friend the Member for Solihull (Julian Knight), recognised the importance of getting private sector capital into the business to allow it to grow. I assure him that we want Channel 4 to continue to produce news. It is part of a genuine suite of support for the creative economy. The hon. Member for Luton South (Rachel Hopkins) reduced these critical media reforms to a “petty vendetta”, and I can assure her that that is not the case. Channel 4’s sale is part of a package of media reforms that the sector has asked for.

As my right hon. Friend the Member for Maldon pointed out, it is in our interests to see Channel 4 thrive. It is because of those interests that we want to drive these reforms, and we believe that Channel 4, in thriving, can invest more in content. He talked about the cut in content spend that we have seen over the last year or so, and he also highlighted the superb Lords report. My hon. Friend the Member for Folkestone and Hythe gave an important account of the trends in play and the need for a radical reset of Channel 4’s role.

The hon. Member for Canterbury (Rosie Duffield) talked about the independent producers, and I want to reassure her that we also value the distinctive content and see that as part of the sale process. I also want to assure my right hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) that we have digested the consultation responses fully. We put a lot of departmental resource into doing that.

In so far as there is any ideological drive, I was interested in the challenge from my hon. Friend the Member for Mansfield (Ben Bradley)—a deeply unfashionable view in this House, it seems, too often—that private sector capital going into a business is a good thing because it can grow businesses, create jobs and drive innovation. Fundamentally, it can also provide content of the kind that audiences—too little discussed, I think, in this debate—love.

The right buyer for Channel 4 will be one that shares our ambition for the business and our belief in what makes it special. As I say, I note the concerns of the hon. Member for Canterbury about its distinctive content. I want to assure her that we are not trying to change the distinctive role Channel 4 plays; we are seeking to give it the best set of tools and the freedom to flourish and thrive long into the future. That is why the Government will move ahead with plans to move Channel 4 out of public ownership to become a free-to-air, privately-owned public service broadcaster.

The Government today have been accused of cultural vandalism, including by the hon. Member for Warrington North (Charlotte Nichols). Let me say that the greatest act of cultural vandalism would be to let our public service broadcasters wither on the vine due to the small-c conservatism of the Opposition or an attitude that there is nothing to see here for our PSBs, particularly given the jobs and the values at stake. We want our public service broadcasters to have a long-term future and, through our media Bill and our broadcasting White Paper, we have the plan to deliver just that.

Question put and agreed to.

Resolved,

That this House supports the UK’s much loved cultural institutions, which are celebrated around the world while creating jobs and growth across the country; in the Jubilee year supports world-renowned British broadcasting which brings the country together in celebration; believes that the Government should reverse its decision to sell Channel 4 as it will undermine the UK’s world leading creative industries and the delicate ecosystem of companies that support them; and calls on the Government to ensure that, if the sale does go ahead, Channel 4’s headquarters continue to be based in Leeds and its remit ensures that it continues as a public service publisher-broadcaster, commissions over 50 per cent of its content outside London, continues its significant investment in new independent British films and funds quality news content which is aired at prime time.