Channel 4 privatisation scrapped by Culture Secretary

Plans to privatise Channel 4 have been scrapped in a sharp reversal of the policy spearheaded by Boris Johnson’s government.

In a letter to Rishi Sunak, the Culture Secretary Michelle Donelan said she had concluded that selling the broadcaster was “not the right decision”.

She added: “There are better ways to secure C4C (Channel 4 Television Corporation) sustainability and that of the UK independent production sector.”

The decision marks an about-turn from the policy pursued by Boris Johnson, who drew up plans to sell Channel 4 – which is owned by the state but self-funded through advertising – as part of a wider effort to modernise the sector.

Mr Sunak backed the move during his leadership campaign, saying a sale was needed to help Channel 4 survive tough competition from streaming giants such as Netflix and Amazon Prime.

But he faced fierce opposition from within his own Cabinet amid concerns about the impact on the UK’s independent production sector.

Ms Donelan instead recommended that Channel 4 should be given more commercial flexibility amid a decline in traditional TV advertising.

In the letter, seen by the News Agents podcast, she proposed that a ban on the broadcaster producing its own programmes should be relaxed.

The Culture Secretary said the easing of this so-called publisher-broadcaster status would help the company to diversify its revenue.

Measures will be taken to safeguard the company’s role in driving investment in the UK, including raising the quota on programmes from independent producers above its current level of 25pc and potentially introducing specific protections for smaller production companies.

The Treasury may increase Channel 4’s borrowing limit above the current £200m level, while the plans also include a new statutory duty for the company’s board to focus on the long-sustainability of the broadcaster.

Meanwhile, Channel 4 has also agreed to double the number of roles based outside London to 600 in 2025 and increase its investment in skills from £5m to £10m a year.

Ms Donelan added: “Overall, my intention is to be clear with C4C that we expect them to achieve greater sustainability – for which the Government will give them more tools – while optimising the support and growth they provide to the creative sector and to the regions.”

The UK’s production sector relies heavily on commissions from youth-focused Channel 4, which was founded under Margaret Thatcher in 1982.

The broadcaster has previously warned a sale would cost the economy £3bn and put many production companies out of business.

While privatisation was pushed heavily by Boris Johnson and then-culture secretary Nadine Dorries, it has proved controversial among ministers and MPs and been heavily criticised by industry.

Ms Donelan said a formal announcement on the new plans should be made as soon as possible, adding that it was “likely to be popular with a majority of Parliamentarians”.

Lucy Powell, shadow culture secretary, wrote on Twitter: “The Conservatives’ vendetta against Channel 4 was always wrong for Britain, growth in our creative economy and a complete waste of everyone’s time.

“Our broadcasting and creative industries lead the world, yet this Government has hamstrung them with this total distraction. Labour opposed this sell off, and took a strong stand.”

The decision to scrap privatisation removes a key policy from the Government’s upcoming Media Bill, which is aimed at protecting broadcasters and audiences in the streaming age.

Industry sources have warned there is a risk the bill could be shelved if privatisation were scrapped. However, the Culture Secretary has insisted it will go ahead.

A DCMS spokesman 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 Four. We will announce more on our plans in due course.”

John McVay, chief executive of Pact, which represents independent producers, 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.

“Channel 4 has a unique position in the broadcasting ecosystem. Its commissioning model has supported British production companies from its inception, providing jobs for thousands of people across the UK. Moving to private ownership would have endangered this. We look forward to working closely with the Secretary of State to ensure that independent production companies can continue to thrive.”

Channel 4 declined to comment. Telegraph UK