Channel 4 is bracing for another privatisation battle as the Government weighs whether to bring in a “deep-pocketed” investor to support the broadcaster through a deep advertising recession and the accelerating shift towards streaming.
Ministers are laying the groundwork for a review of the state-owned broadcaster that could lead to all or part of it being sold. It comes as concern mounts over Channel 4’s future. The broadcaster is publicly owned but receives no taxpayer funding and depends almost entirely on advertising sales. The television advertising market is expected to fall by 20pc this year as coronavirus prompts brands to slash budgets.
A Government source said: “Channel 4 doesn’t have any other income. They are sorely dependent on advertising and that is going to come under strain.
“Having an owner, or part-owner, with deep pockets that is willing to invest is really valuable.”
It is understood a potential privatisation could mean a complete takeover by a rival such as Channel 5, owned by ViacomCBS, or the sale of a minority stake to a newcomer, the source said.
News UK, Rupert Murdoch’s newspaper publisher and radio broadcaster, is preparing to move into video programming, for instance. It has repeatedly explored options for a move into television, industry sources said, particularly following the takeover of Sky by Comcast, which left Mr Murdoch without a stake in British broadcasting. A minority investment in Channel 4 could help address media plurality concerns, one media merger specialist said.
The discussions, which are at an early stage and may not lead to a transaction, in part because legislation may be required, form part of plans for a radical shake-up of traditional television and public service broadcasting licences.
As well as a potential privatisation of Channel 4, ministers are considering whether to scrap the public service obligations on ITV and Channel 5.