Update: Channel 4 has published its response to the government consultation, specifically refuting the claims about its ability to sustain itself via advertising revenue: " We do not agree with the consultation document’s assessment that Channel 4 is overly reliant on advertising revenues that are in decline, and that changes in the broadcasting sector threaten Channel 4’s sustainability.
"The Government is right to identify the challenges in the broadcasting sector, which relate primarily to a decline in linear viewing and increasing competition for attention from streaming services. But these challenges apply to all broadcasters, regardless of ownership status. Further, the evidence demonstrates that both digital and broadcast advertising remain robust."
Original: Channel 4 has gained a notable supporter in its campaign to prove it is financially viable in the age of streaming. The Institute of Practitioners in Advertising (IPA) has issued a statement saying that it sees no upside to the mooted privatization of the publicly-owned broadcaster, but instead warns of “significant downsides”.
The IPA’s director general Paul Bainsfair says: “Ultimately, Channel 4 is a success. Its purpose-driven programming is good for society and it’s good for culture, and crucially, to the IPA, our members and their advertiser clients, it’s good for business. We see no upside but significant downsides to privatization.”
The Conservative government has repeatedly raised the possibility of putting Channel 4 out to privatization over the past few years. The primary reason cited by the Department for Digital, Culture, Media and Sport (DCMS) has been the changing landscape of audience consumption given the rise of streaming services.
Culture secretary Oliver Dowden announced the consultation into the sale by stating: “The media world has changed immeasurably since Channel 4’s creation in the early 1980s, but while we have more choice today, the need for a strong and successful Channel 4 continues.
“So in the face of rising global competition, now is the right time to strengthen UK public service broadcasters and consider releasing Channel 4 from the constraints of public ownership, enabling it to thrive for the next 40 years and beyond.”
Time spent with linear television versus streaming services reportedly reached a tipping point last year, with more streaming hours viewed than linear on Samsung smart televisions. Despite that, overall time spent with each was up again year-on-year.
However, Channel 4 and its supporters have refuted the idea that the broadcaster is financially unsound given the rise of streaming alternatives. Notably, despite Channel 4 having issued statements outlining its intention to move away from an over-reliance on advertising, the IPA’s statement also supports that claim.
The IPA states: “Channel 4 is a driver of continued and often first-to-market innovation, which makes the commercial TV landscape more competitive and more attractive to advertisers. This is evidenced by the success of its market-leading Broadcaster Video On Demand platform, All4.
“As the TV market rebounds post-Covid, its world-class leadership directed by its unique remit is set to deliver and sustain market-beating growth amid this rise in internet-enabled viewing.”
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The IPA also notes that, despite government assertions that the free market will benefit from the privatization of the broadcaster, it would have a deleterious impact on much of the industry.
As ad spend increasingly shifts to digital, the IPA claims that such a move to private ownership would drive the unit price of television advertising up and accelerate the movement to purely digital advertising. While ad spend is set to rebound following the pandemic, it has been forecast that ultimately ad spend will follow the trend of falling ratings for linear television.
Further concerns around media plurality and the impact on the UK creative industry have been raised from a number of commentators, including the IPA in its statement. Creatives have noted that as part of the remit of Channel 4 is to promote diverse talent, any move to privatization could implicitly promote homogenous content, harming both programming and the advertising that surrounds it.
If you value @Channel4 now is the time to speak up. The UK government seems intent on selling the broadcaster, but they don’t own it, you and I do. Let them know what you think by responding to their consultation. https://t.co/Vodi2gLoiY
If you value @Channel4 now is the time to speak up. The UK government seems intent on selling the broadcaster, but they don’t own it, you and I do. Let them know what you think by responding to their consultation. https://t.co/Vodi2gLoiY— Mark Downie (@markmdownie) July 7, 2021
Part of the issue with any sale is Channel 4’s commitment to public service and independent production companies, both of which are likely to be sticking points for any sale. Multiple organizations have warned that, at the bare minimum, it puts suppliers outside of London at risk of missing out on business with the channel.
Over the past weekend Channel 4 reportedly spent seven figures on a partnership with Amazon Prime to acquire the rights to the US Open finals, which we suggested is in part to improve public opinion of the broadcaster as the privatization consultation takes place. The consultation, which has invited insight from the IPA and other organizations, closes today.