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Channel 4: Privatisation

Volume 768: debated on Wednesday 3 February 2016


Asked by

To ask Her Majesty’s Government, further to the remarks made by Baroness Neville-Rolfe on 10 December 2015 (HL Deb, cols 1674–6), what they have assessed to be the major benefits of the privatisation of Channel 4.

No decisions have been taken about the future of Channel 4. Channel 4 is an important part of the UK broadcasting landscape, and the Government want to ensure that it has a strong and secure future. We are looking at a wide range of options to help deliver this, including those proposed by Channel 4’s own leadership and those involving private investment.

I thank the Minister for her reply. The Secretary of State has said that he wishes to ensure that Channel 4 can continue to deliver its remit. Does the Minister accept that privatisation would have a negative impact on the channel’s delivery of news and current affairs, diversity, the Paralympics and the plurality of public service broadcasting in general? Will Her Majesty’s Government now rule out privatisation?

My Lords, taking into account the remit that the noble Baroness outlines, we are rightly looking at all the options with a view to achieving what the Prime Minister called Channel 4’s secure and successful future. That is very important, because Channel 4 is so unusual in its distinctiveness and experimentalism, being innovative and of course appealing to diverse sections of society.

Does the Minister agree that, operationally, Channel 4 is already in the private sector in that it raises money through advertising, and it cannot do that unless it is successful in attracting an audience for its programmes? Privatisation would simply face it with the obligation of funding that privatisation through either bank interest or dividends to shareholders, all of which is money that could have been spent on programming. That is therefore undesirable.

We are looking at all the options. Of course, government is a sole shareholder, and the channel gets 90% of its revenue from advertising, as has been suggested. Its revenues are £930 million and last year it made a profit of less than £5 million.

My Lords, I declare an interest as a member of the Channel 4 pension fund and a former chief executive of Channel 4. Does my noble friend agree that the current settlement for Channel 4 is no longer fit for purpose and puts a risk on the public purse, because in the end the taxpayers are the shareholders of last resort? The world has changed dramatically, and the commercial threats to Channel 4 are a hundredfold greater than they were when I was there and was part of the present settlement. It is absolutely time that the channel had a new settlement that will enable it to change its modus operandi and become a fully fledged business.

I very much agree with my noble friend that this is a challenging and fast-changing environment. It is partly because of that that we are looking at options to secure Channel 4’s future. We will look at all the points made about benefits and the changing environment in which the media operate today.

My Lords, is the Minister aware that Channel 4’s overall share of young audiences is growing and that a higher proportion of young viewers watch “Channel 4 News” than any other broadcaster’s news? Does she accept that Channel 4 has an important role in providing public service content to young people, and that privatisation could threaten this very important part of its remit?

I very much agree with the noble Baroness, except perhaps her conclusion. “Channel 4 News”, which is regulated news provision under Ofcom rules, is important. It is great that the channel attracts younger audiences because that is what we need for the future of the media and our creative industries in Britain.

My Lords, I am sure the whole House will congratulate Charles Gurassa, the new chair of Channel 4, appointed by Ofcom on the advice of the Secretary of State. According to the Financial Times, Mr Gurassa has previously chaired three media and communications companies, all of which were sold during his tenure. Can the Minister confirm whether privatisation experience was specified in the job description?

As the noble Lord said, the appointment was made by Ofcom and approved by the Secretary of State. It is true that Charles Gurassa brings a wealth of experience. That includes business experience of the kind the noble Lord suggests, but also experience on the board of the National Trust and as chairman of a housing association. He is very broadly experienced, and it is a sound appointment. I very much look forward to his ideas for the future of Channel 4.

My Lords, while my noble friend is rightly looking at all the options for the future of Channel 4, will she take into account the extraordinary public service work it does for the disabled? Following the exceptional and exhilarating coverage of the Paralympics, it has now nominated 2016 as its year of disability, in which it is substantially increasing the number of disabled actors in its shows, increasing the number of disabled people working in production companies and reserving a full 50% of its apprenticeships for the disabled. Is this not a significant example from public sector broadcasting that other broadcasters would do well shamelessly to follow?

I could not agree more with my noble friend. Of course, Channel 4 is particularly tasked with serving diverse audiences, which is an important part of its remit that we want to maintain.

The noble Lord did not quite say what I hoped he would say but he made a very important point. I digress slightly from the issue by saying that many major companies in this country have pension funds that are greater, in terms of their deficiencies, than the value of the company. I declare an interest in Channel 4, having been a member of the authority that set it up in the first place. Will the noble Baroness confirm that the Government’s ambitions here have nothing to do with the Chancellor’s growing need for funds?

We are very clear that we are looking at all the options to secure a good future for Channel 4. The sort of considerations mentioned are not the issue.

My Lords, I am sure the Minister is familiar with the phrase, “If it ain’t broke, don’t fix it”. Will she please explain to the House what is broken about Channel 4 that needs fixing?

I think that would be a good Channel 4 programme. The environment is challenging and changing, as I have tried to explain and as my noble friend Lord Grade kindly said. That is a reason to look at the benefits and at options. As I have explained before, it is good to look at the future of organisations like this and to build on their success.