If done correctly, the privatisation of Channel 4 will be a wise decision

Fiona Townsley

April 8, 2022

Channel 4’s funding model has long been debated, and the announcement of privatisation is arguably Nadine Dorries’ first good decision. However, there are still further decisions to be made.

It is right to assert that removing Channels 4’s anti-competitive advantage has been long overdue. But, further government, and ultimately taxpayer, involvement is not off of the table. In 2007, the Government offered £14 million to help the channel’s digital switchover. There is no justification for the government to provide such security in a market where other companies successfully operate independently. With the likes of Netflix, Disney+ and Sky it is clear that TV is a lucrative industry. If Channel 4 cannot compete on a level playing field, it shouldn’t be competing at all. 

In fact, Channel 4 could be more successful without the government’s interference. Restrictive regulations hinder the network’s ability to compete with freely operating alternatives. Prescribed quotas for types of programming such as ‘330 hours of school programmes’, and ‘not less than 208 hours … of news programmes in peak viewing time’ per year are just the tip of the iceberg.  

Lying beneath the sea is: a requirement that 70% of programmes in peak viewing time need to be originally produced or commissioned for the service; 30% need to be produced outside the M25; and at least 25% need to be from independent productions. Lifting these unnecessary restrictions would allow the company to more accurately respond to the wants of the viewers, rather than the demands of the government. 

With government finances in a dire state, it should take advantage of selling this unnecessary asset. Up to £1.5bn in revenue could be used productively to lessen national debt or ease the cost of living. That is, if the government doesn’t persist in following its less effective alternative: reinvesting the money in a ‘creative dividend’. 

Some may argue that privatisation will drastically change the channel – that it will erode culture and reduce programming – however, there is no evidence to support this conjecture. History only illustrates the contrary. For example, following Viacom’s purchase of Channel 5, the network agreed to increase its news programming, UK production, and production outside the M25.

Another criticism hurled at Channel 4 is its amount of UK based production. But, in 2020, Netflix increased spending on UK shows by 50%, Sky UK by 50% and Channel 4 reduced it by 25%. 

Clearly privatisation is not going to devastate the UK production sector, and if anything, will support it. Granted, Channel 4 was the only network in Britain not to turn down award winning drama ‘It’s a sin’, but it would be implausible to argue that UK culture is so fragile that it relies on the network responsible for ‘Naked Attraction’.

It is no revelation that  we have condemned state owned media. Claims that the privatisation is a government attempt to ‘dictate news outlets’ are  ludicrous. By removing government influence they are doing the very opposite. Independent organisations are vital for holding the government to account and so we should celebrate this decision as a victory for liberalism. The government’s control over Channel 4 is hardly Kremlin-esque, but it is far from non-existent, with repeated incidents of the government blocking appointments to the board. For a government who have repeatedly infringed the right to free speech, quite frankly, this liberal policy is a breath of fresh air. 

Channel 4 might technically be owned by the public, but by emancipating it to the stock market, the public can actually influence its operations. Let the people run Channel 4, not the government.


Written by Fiona Townsley

Fiona Townsley is a Research Associate at the Adam Smith Institute.

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