Channel 4: Privatisation

John Whittingdale Excerpts

Wednesday 21st July 2021 Westminster Hall

[The Minister for Media and Data (Mr John Whittingdale)]

I thank you, Ms Fovargue, and Mr Deputy Speaker, for presiding over our debate. Neither of you expected to be in this position today, so we appreciate your giving up the time to join us. I also thank the hon. Member for Wallasey (Dame Angela Eagle) for securing this debate. As she says, it is a very important subject, so I am glad that the House has an opportunity to debate it.

However, I do not think a single speaker has talked about the revolution taking place in television at the moment. Every speech has been backward looking. Each one has been a list of admittedly terrific programming over the past 40 years, but there has been no looking forward and no reference to what is happening to television viewing and how the landscape is changing. Linear viewing is in rapid decline. Young people are no longer looking at scheduled programmes on the traditional broadcast channels. The competition for eyeballs, which comes from streaming services, a new one of which joins the market almost every few months, is completely changing. Therefore, what we intend and wish to do is look forward. Yes, Channel 4 has a terrific record and is doing well at the moment, but it is the Government’s job to ensure that Channel 4 has a viable future going forward—not this year or next, but in 10 years. That is the purpose of the consultation.

[Sir Peter Bottomley]

I think the Minister can be assured that each Member present has read the consultation document. We know that the Government say the structure of broadcasting has changed. We have seen that All 4 has 41%, which is only a little lower than Netflix. Channel 4 is doing all those things. At every paragraph, the Government say, “Change the ownership, and we’ll do xyz.” The only example given by the Government is Royal Mail, looking backwards to 2013. The Minister is right in thinking that we understand what he is going to say, because we have read his document. We are challenging the idea that a new owner is necessary.

[Mr Whittingdale]

I will come to that. I am sure my hon. Friend has read the consultation document, and it is extraordinary that the arguments, which I believe are strong, have not actually been addressed by any speaker so far.

[Mr Mitchell]

The point is that we are looking forward. Will the Minister address two arguments? First, I made the point about Syria—

[Mr Whittingdale]

I am going to come to those points.

[Mr Mitchell]

Only Channel 4 provided the seriousness that was needed on that subject. Secondly, the Minister will find that young people and people across society are accessing “Channel 4 News” in many modern and futuristic ways, so his point about Members being uninformed and looking backwards might require a little elucidation.

[Mr Whittingdale]

If my right hon. Friend will forgive me, I am going to come to those points. Given the limitations of time, I am anxious to do so.

I do not dispute the list of programmes, many of which are great, made by Channel 4 over the past 40 years. There are some real jewels among a lot of other programming. It was once said that Channel 4 is a public service tail wagged by a very large commercial dog, and that is the consequence of the model under which it operates. I have enjoyed things such as “It’s a Sin” and “Gogglebox”, and I want to talk specifically about “Channel 4 News”.

Occasionally, I have been cross with “Channel 4 News”. I have been just as cross with Sky News and BBC News. Channel 4 is an essential contributor to plurality. It is worth bearing in mind—again, this has not been recognised in the debate—that “Channel 4 News” is not actually produced by Channel 4. It is an ITN production, and ITN has done a terrific job in providing news programming that is different from the other broadcast news services. It has also been extremely successful internationally, as it has an Oscar-nominated newsroom and has won five Emmy awards.

[Brendan O'Hara]

Will the Minister give way?

[Mr Whittingdale]

If the hon. Gentleman will forgive me, I am not going to have time to give way.

I absolutely pay tribute to ITN for the work it has done for Channel 4, and it is certainly our intention that, whatever happens to Channel 4, news should remain a major part of its schedule. However, there have been huge changes. When Channel 4 was created, there was a choice between the BBC and ITV. Channel 4 was founded by a Conservative Government in 1982 to provide alternative viewpoints, and it has been very successful in doing that. Since that time, we have seen the advent of satellite television and the coming of digital terrestrial television. Now we have the streaming services, so there has been a huge explosion in choice. Some of that content, which was originally not available and which Channel 4 was set up to provide, is now available in a large number of different places, so Channel 4 needs to adapt to that.

The latest Ofcom report on the future of public service broadcasting states:

“Rapid change in the industry—driven by global commercial trends and a transformation in viewing habits—is making it harder for public service broadcasters to compete for audiences and maintain their current offer… Change needs to happen—and fast.”

That is why we have set up the review of public service broadcasting, and why it is right to consider whether Channel 4 is best placed to continue to thrive under the current ownership model, because there are some worrying signs.

Channel 4 is entirely dependent on advertising, unlike other broadcasters such as ITV, which has successfully diversified into production, or the BBC, which can rely on the licence fee. Channel 4 relies on advertising. More than 90% of its revenue comes from linear TV advertising, and advertising is under pressure. It is likely to come under greater pressure, in part due to the actions that Parliament is going to take in restricting advertising spending on, for instance, foods that are high in fat, salt and sugar, and possibly such spending with respect to gambling, which we are considering at the moment. Therefore, that model is already coming under pressure.

Competition from the streaming services is almost inevitably going to lead to a decline in audience share over time as more and more content is provided by such services, which can outspend Channel 4 by a factor of 10 with respect to how much they can invest in high-quality content.

Reference was made to Channel 4’s performance. Yes, it did well to record a profit this year, but it is worth bearing in mind how it did so. It is not difficult to continue to make a profit if spending on content is cut by £138 million. That is what happened. Channel 4 slashed the budget on content. It did not, incidentally, slash the budget on employment expenditure, which actually went up—all the money came out of content spend. It is difficult to see how that it is going to be able to return to a position of spending the amount that it was previously. Yes, Channel 4 has been supporting independent producers, although the figure that was quoted of support for more than 300 independent producers is not actually correct. The annual report shows that 161 production companies have been supported that actually meet the definition of indies.

Yes, Channel 4 has moved its headquarters to Leeds—against great resistance—and the hon. Member for Leeds North West (Alex Sobel) is right to celebrate the fact that he has a new building there, but it is worth bearing in mind that Channel 4 still has a very large and expensive building about 100 yards from where we are today. Therefore, if it is properly committed in that regard, there is a case for it to move more employees and to do more outside London.

There is a question whether private ownership might result in greater investment. I was surprised to hear from my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) that he questions whether it is possible to fulfil public policy purposes and to satisfy shareholders. He will know that any number of utility companies are doing exactly that. I point to examples such as the telecommunications companies, the electricity companies and the gas companies.

[Mr Mitchell]

Will the Minister give way?

[Mr Whittingdale]

I do not think I am going to have time.

I also point to Channel 5. Its spend on content was very small while it was under UK ownership, but when it was bought by Viacom, it became channel of the year and there has been a massive investment.

The one thing I make categorically clear is the reason the Government are looking at the future ownership of Channel 4, which is that we wish to sustain Channel 4. We are concerned that, in the longer term, the model is going to come under ever-increasing pressure and will be unable to deliver the content that we all want to see.

[Dame Angela Eagle]

Will the Minister give way?

[Mr Whittingdale]

I am afraid I do not have time.

I want to make it absolutely clear that there is no political agenda attached to this. I am completely committed to an independent Channel 4, and I welcome the fact that it has a questioning news programme. This is not motivated in any way by a political agenda or ideology. It is about sustaining Channel 4 and making sure that it has a viable future. That is why we are having a consultation. It is a consultation.

I want to answer the point about remit. We are asking a question about whether the remit might or might not be amended to take account of changes. It is not a question of removing the remit. In some areas, there may well be a case for strengthening the remit, and there is absolutely no intention to strip the remit away. The remit will be there. Whether it is tweaked in some way, perhaps to increase the requirements for production outside London, is something that we are asking questions about.

I also want to answer the question about the impact assessment. The impact assessment will be determined by the answers to those questions. An impact assessment cannot be carried out before those things have been decided—for instance, what the remit should be, as that will have a huge effect on the impact. All those matters are subject to an open consultation, with no decision taken.

The hon. Member for Wallasey referred to lack of parliamentary time. I can promise her that, if it is decided to change the model, that will require primary legislation. There will be no lack of opportunity for Parliament to debate any changes that we decide to make. There will be an impact assessment at that time. No decision has been taken. It is the job of Government to look forward and to ask how we can best ensure that Channel 4 has a viable future. That is what we are doing.