Five reasons why the Tories dropped their plan to privatise Channel 4

Officially, the Channel 4 Corporation is an ALB (arm’s length body), Whitehall jargon for owned by the public but not run by the government, one of a shrinking list of businesses on HMG’s books that vary from the Ordnance Survey and The Royal Mint to the banks rescued during the financial crash, plus the company formally known as the Atomic Weapons Establishment. C4 is the only business on that list that does any kind of journalism; the BBC’s Royal Charter puts it in a different category.

So maybe it is not surprising that from time to time the Conservative government of the day picks out C4 from these strange bedfellows and asks if it should sell off this publicly owned, commercially funded broadcaster with annual revenues of around one billion pounds. The latest occasion was the fourth time (that’s by my count, others argue it is the sixth or seventh). So how come every time the Tories ask themselves the same question, they come up with the same answer – don’t sell?

The first prime minister to ask was, ironically, the one who had launched the channel in 1982 as publicly owned but commercially funded. As the BJR revealed in 2021 (Channel 4: the 30 years’ war, Volume 32, Issue 3), Margaret Thatcher thought she had a better idea by 1988: create an even bigger “third force” against the BBC and ITV by merging a privatised Channel 4 with a soon-to-be-created Channel Five. Her plan was floated in a white paper but lacked support inside the Tory party, let alone outside it.

Eight years later, in 1996, John Major was tempted to sell to offset a shortfall from other privatisations. His cabinet voted to explore the idea but opposition within the Conservative Party was symbolised by a “Dear John” letter from the then C4 chairman and Tory supporter Sir Michael Bishop. “For Channel 4, with new shareholders seeking to maximise profits, money for dividends would have to be taken directly from the screen at viewers’ exp, by diverting programme expenditure.” That argument carried the day.

Under New Labour, C4 was safe, and during the coalition years Liberal Democrat ministers acted as a brake on their Tory colleagues. But when in 2015 the Tories won an overall majority, David Cameron appointed as his secretary for culture, media and sport (DCMS) the man who had been Margaret Thatcher’s political secretary during that 1988 debate about C4’s future. For John Whittingdale, this was his chance to complete his former leader’s unfinished business. A civil servant was spotted going into 10 Downing Street with a document revealing that work should be done on “extracting greater public value from the Channel 4 Corporation, focusing on the privatisation option in particular”. Putting aside any mild embarrassment that the previous month Whittingdale had said “the ownership of Channel 4 is not currently under debate”, he seemed to be on course for success.

However, when Cameron lost the Brexit referendum in 2016, Theresa May took over as PM and sacked Whittingdale. An ambitious junior minister called Matt Hancock picked up the C4 brief and used the threat of privatisation to try to extract some “greater public value”. In a compromise worked out with Channel 4 CEO Alex Mahon, the largest C4 office would remain in Horseferry Road, Westminster, but a new site outside London would became the “national HQ” of the channel. Leeds was chosen, and other departments were moved from London to regional centres. This seemed like a deal that could put the privatisation issue to bed for a decade or so.

But as prime ministers continued to come and go, by 2020 Whittingdale was back in a more junior role at DCMS, summoned from the back benches by Boris Johnson, who was developing a thing about the folks in Horseferry Road. Various people in and around the channel weren’t above winding him up either: replacing Johnson with a block of ice when he wouldn’t take part in a party leaders’ debate on climate change, accusing him of sending his father as a replacement when Johnson Senior was actually a guest of the channel, misquoting the prime minister as saying “people of colour” instead of “people of talent”, and finally calling him a liar. Downing Street was keeping the score as it planned its revenge.

“Here we go again,” said media analysts Enders as Whittingdale was given the go-ahead to restart the C4 debate. Trying to leave nothing to chance this time, he began with “the government’s preferred option”, which was to “facilitate a change of ownership of Channel 4”. But the persistent privatiser fell at the final fence again when Johnson fired him in a DCMS ministerial slaughter after the department failed to deliver the Ofcom chairmanship to Paul Dacre. Whittingdale took it badly and was later compensated with a knighthood.

Nadine Dorries was put in charge at DCMS – what could possibly go wrong? Well, her patron at No 10 got fired by his own MPs for starters. When Johnson left, and with him key advisers pushing for privatisation, the C4 parcel was passed to incoming PM Liz Truss. During the campaign for the party leadership, she had fudged her position and once in office replaced Dorries with Michelle Donelan, who promptly described herself as “somebody that listens” and decides policy “based on evidence”. The well-paid advisers to the likely broadcasting bidders feared the gig was up.

Their hopes rose a little when Rishi Sunak became PM because he had declared himself a seller. However, faced with so many other more pressing problems, Downing Street allowed Donelan at DCMS to conclude that not only was the status quo the option to take but that C4 should also be given something it had never asked for over 40 years: the right to make and sell some of its own programmes.

The campaign to privatise C4 had got closer to legislation than any previous attempt, so what caused this remarkable last-minute change of policy?

1. The political roundabout

The sale of Channel 4 has been considered over the years by no fewer than seven Conservative prime ministers and 17 cabinet ministers who held the media brief. How many were in the job long enough to understand the detail? Margaret Thatcher and John Whittingdale, for certain, that’s clear from the his and hers 1988 papers in the National Archives. But how about Nadine Dorries, who told a Commons committee that Channel 4’s future should be “brought into question, particularly when it is in receipt of taxpayers’ money”. Channel 4 receives no taxpayers’ money.

How many were in the job long enough to care? When the ministerial stars were in alignment for the zealot partnership of Boris Johnson and John Whittingdale and then the Johnson/Dorries coupling, there was strong momentum towards a sale, and a hasty consultation was organised to make the parliamentary timetable as fast as possible. When Whittingdale fell, ironically at the hands of Johnson, and then Johnson himself fell, there were few left who thought the issue was worth a lengthy and potentially difficult parliamentary process. The musical chairs paused for a moment and somebody had to make a decision. Those who supported what C4 had done for the Paralympics and other good deeds (one cabinet minister even stood up and sang Happy Birthday at a C4 party), combined with the “don’t knows” and the “don’t cares”, turned out to be in the majority. Even the lead presenter of Channel Four News being caught calling a minister a “c***” off air was forgiven.

2. The limpness of the ideological argument

The base case for privatisation was once summed up by Whittingdale: “It’s worth asking the question why we need two publicly owned broadcasters.” The simple answer is that the BBC and Channel 4 have different roles. But how could the private sector best perform C4’s duties around innovation, creative risk-taking, and championing unheard voices? A radical alternative would have been a challenge to the free market; maybe language such as “we will deregulate Channel 4 allowing private capital to create innovative new services” and, of course, at the same time maximise the revenue for the Treasury from the sale. Instead, the Government went with the public service broadcasting status quo, sweetened only by a hint of “modernisation of Channel 4’s remit and obligations”. It was a pitch to the consolidators, such as ITV, Viacom (owner of Channel Five) and Warner Brothers Discovery, to increase their scale in the UK, run their own programmes on C4’s channels and, most importantly, take C4 off the Government’s hands. But would it be worth the bother?

3. The failure of the business case

Back in 1996, Whittingdale was arguing that Channel 4’s healthy financial position – annual surplus of £128million – meant it was time for “privatisation at the first opportunity”.

By 2016, he said privatisation was necessary because despite the financial position (£26million surplus and record revenues), C4 might not be sustainable in the long term. After the pandemic, the 2021 surplus was back over £100million, backed up by net cash reserves of £272million. Surviving Covid had been the incentive for cutting costs and Channel 4 was embracing the on-demand revolution with gusto. The “unsustainable” argument was clearly unsustainable.

4.The loyalty of the indie sector

Long gone are the days when Channel 4 was the first, and for some the only, stop for independent producers pitching a project. Now everybody from the BBC and ITV to Sky and the so-called streamers (Netflix, Amazon, etc) commissions from and sometimes buys “indies”. But the sector kept faith with the channel that gave birth to it and any doubters were probably pushed into the C4 loyalist camp when the Government said successful bidders could run more of their own shows on 4.

5. The inscrutable Alex Mahon

For five years, Alexandra Rose Mahon has tried to get on with her day job as chief executive of Channel 4. But DCMS ministers and civil servants kept calling about privatisation, often just to try to work out what she thought. Alex played her cards smartly throughout. She accepted that “the government has every right to look at the ownership of Channel 4 from time to time” and embraced the “levelling up” agenda which the previous C4 regime had rejected when some non-executive directors advocated moving jobs out of London. Her non-confrontational but quietly effective campaign ensured a “sensible decision”.

First published in the British Review of Journalism March 2023

Stewart Purvis was connected with C4 over 40 years as editor of Channel Four News, ITN chief executive, a C4 consultant and a non-executive director for seven-and-a-half years, ending in May 2021. @StewartPurvis

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