Pandemic takes toll on Channel 4 as it predicts 'severe' cuts to ad revenues

Pandemic takes toll on Channel 4: 'Lost production and dramatically reduced revenues'

Channel 4 is preparing business cuts and staff furloughs as the Covid-19 pandemic looks set to put a 50% dent in TV ad revenues in April and May.

The Gogglebox broadcaster says it is "well equipped" to navigate normal cyclical pressures on the ad market, but has highlighted how the impact of the coronavirus crisis on the economy has had a "severe effect" on the demand for advertising in the UK.

As a result, Channel 4 has forecast that the wider TV ad market will be down in excess of 50% over April and May, with limited future visibility.

The broadcaster is trimming its outgoings as a result of this diminishing ad spend from advertisers hindered by the lockdown. Its forecast follows on from ITV projecting a 10% shortcoming of its own in April owing to the reluctance of travel and tourism brands, in particular, to spend while their product remains inaccessible.

As a result of cuts from clients, all Channel 4 exec and non-exec board members are to take voluntary 20% pay cut and suspend 2020 bonuses. The company is aiming to furlough around 10% of staff during this time.

The latest from Channel 4 appears to indicate a more severe shortfall is ahead for broadcasters than planned as media buyers reassess budgets, and the platforms they spend them with. It's worth noting Channel 4's predicted ad revenue shortfall comes at a time when broadcasters are hitting unprecedented audiences due to the lockdown.

The media owner's content budget is expected to be reduced by £150m over the next few months, with £95m of further savings targeted across the organisation. These include lower marketing budgets for Channel 4 itself.

The firm said in a statement current lockdown conditions are also making the production of programmes and films difficult, so cost-saving measures are being instated for practical — as well as financial — reasons. The company has stressed that it has ringfenced at least £5m in funding for small, nations and regions and Black Asian Minority Ethnic (BAME)-led independent producers.

Content production will continue, just at a "slower tempo" and most of the upcoming slate has been tailored to address the crisis. Already Coronavirus: How to Isolate Yourself is one of six specially-commissioned films shown so by the broadcaster so far. It reached more than seven million viewers last week and will be followed by Coronavirus: Living With It, Coronavirus: How Clean is Your House, and Coronavirus: How Britain Is Changing.

Alex Mahon, Channel 4’s chief executive highlighted her belief that Channel 4 has a role to play in guiding the public through the pandemic. In particular, it has seen record viewing figures for Channel 4 News including over 200 million views to its news content on social media. Its ‘Stay at Home’ on-screen idents (pictured) have reportedly reached almost two-thirds of the UK population.

Mahon said: “As a commercially funded business the Covid-19 outbreak has had a severe impact on our advertising revenues and so we are taking action now to manage our costs appropriately and ensure that we both protect our staff and our ongoing ability to serve our audience.

“We know that these are exceptionally challenging times for everyone in the UK, particularly many of the producers, talent and freelancers we work with across the television and creative industries and we are committed to safeguarding our long-term ability to invest in distinctive and challenging content and create jobs and opportunities in the sector across the UK.”

Ian Katz, Channel 4's director of programmes, said: “The coronavirus crisis has hit all commercial broadcasters with a double whammy of lost production and dramatically reduced revenues but it also poses a profound creative challenge which our indie partners have risen to with remarkable ingenuity, speed and resourcefulness.

“We will be continuing to commission shows that capture the impact of the pandemic on our society, address our viewers concerns and help them get through this difficult period."

The irony of the difficulties is that Channel 4 is continuing to breach audience record due to the lockdown. Friday Night Dinner hit the biggest audience for a Channel 4 comedy in over a decade – with a current consolidated average of 4.3 million for season six, episode one. It also has the largest 16 to 34 share recorded by any comedy broadcast on any channel (excluding Christmas day).

Gogglebox hit a 5.3 million record and Celebrity Bake Off its biggest overnight audience ever last week with 4.4 million viewers.

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