Culture secretary ‘recommends dropping Channel 4 privatisation’

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The UK culture secretary has recommended the government drop its plans to privatise Channel 4, according to a leaked letter that suggests ministers will instead push the broadcaster to move jobs out of London.

Michelle Donelan set out her plans for the climbdown in a document sent to the prime minister, Rishi Sunak, which suggests there is little appetite for privatisation of the broadcaster among MPs.

She said she “concluded that pursuing a sale at this point is not the right decision and there are better ways to secure C4C’s [Channel 4 Corporation] sustainability and that of the independent production sector”.

Donelan said Channel 4’s role in supporting the independent production sector “would be very disrupted by a sale at a time when growth and economic stability are our priorities”.

The proposal to take the broadcaster out of public ownership was announced under the tenure of Donelan’s predecessor, Nadine Dorries, who led the move during Boris Johnson’s premiership.

There were repeated suggestions – including from some Tory MPs – that the privatisation plan was a politically motivated attack on Channel 4 as part of a series of “culture war” policies targeting the media under Johnson’s leadership.

Channel 4 is owned by the state but funded commercially, largely through advertising. Unlike other broadcasters such as ITV, Channel 4 is required to reinvest its profits into making distinctive programmes. It is also barred from making its own programmes, meaning it relies on a network of independent companies to make shows.

Rather than sell the channel, Donelan suggests that Channel 4 should be allowed to make more shows in-house and borrow more money from the Treasury as this would give it “the flexibility to make some of its own content and diversify its revenue more effectively”. However, this technical change may raise concerns among production companies who could lose out.

The culture secretary also said Channel 4 had committed to moving 600 staff out of the capital – raising the prospect the broadcaster could choose to sell its central London headquarters, which has been valued at up to ?100m.

Other proposals include requiring the Channel 4 board to set out a clearer path to long-term sustainability in a world beyond traditional TV. In common with other broadcasters, Channel 4 is struggling with the long-term decline of television audiences and is still heavily reliant on television advertising for its income. Years of debate over privatisation has also sapped resources and occupied the attention of senior executives.

Lucy Powell, the shadow culture secretary, said the privatisation debate had been “a complete waste of everyone’s time”.

“Our broadcasting and creative industries lead the world, yet this government has hamstrung them for the last year with the total distraction of Channel 4 privatisation,” she said.

John McVay, the chief executive of independent producers association Pact, said: “The government has made the right decision to hit the stop button on Channel 4 privatisation. It was always a solution in search of a problem that didn’t exist.”

When the government announced plans last year to privatise the channel, it said it was so the broadcaster could better survive in a media landscape dominated by the likes of Netflix and Amazon. But Channel 4 always insisted it could be financially sustainable on its own.

A spokesperson for the Department for Digital, Culture, Media and Sport (DCMS) said: “We do not comment on speculation. The DCMS secretary of state has been clear that we are looking again at the business case for the sale of Channel 4. We will announce more on our plans in due course.”