“For Sale: British broadcaster. Empty library, highly restrictive terms of trade, makes losses. Apply HM Government.”
Tentative plans to privatise Channel 4, the UK’s ever-so-slightly edgier broadcaster, are again doing the rounds. Previous talks quickly fizzled out. True, public finances are far more stretched this time round. But supposing — via wildly optimistic assumptions — that a sale pulled in £1bn, roughly one times sales, this would barely cover a fortnight’s debt servicing.
Few if any bidders are likely to bite under Channel 4’s current structure as a public sector broadcaster funded by advertising. Its remit to maximise expenses jars with most investors’ mission to maximise financial returns. There are few tangible assets.
Intangibles, like relationships with British independent producers, can be cultivated by anyone with a commissioning budget. Oh, and Channel 4 has only three years left to run on its current licence.
Trade buyers would struggle to find cross-selling opportunities or fat to cut. The pool of bidders is a shallow one to begin with. The telecom sector’s dash for media assets has veered into reverse.
As the government has learnt from its semi-nationalisation of the railways, switching owners means rewriting the terms of engagement. Patrick Barwise, who co-authored the 2016 paper on the consequences of privatising Channel 4, calls it the “Robin Hood” model. The big hits — such as cooking show The Great British Bake Off — subsidise obligatory public service fare like news bulletins or content for remote communities.
Restructuring Channel 4 for private investors would mean diluting these obligations and enabling the broadcaster, rather than independent producers, to hold the intellectual property. Channel 4, which has its own small streaming operation, might then have valuable assets to maximise — a more appealing proposition to investors.
The downside is the damage that would do to Britain’s media ecosystem; particularly the independent studios that are effectively receiving subsidies. Tellyland types take comfort: the complexity of engineering a sale outweighs potential returns. It will most probably remain a pipe dream of Tories irked by the critical tone of some news coverage.
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