Channel 4 Privatisation

(Urgent Question): To ask the Secretary of State for Digital, Culture, Media and Sport if she will make a statement on the privatisation of Channel 4.

Our TV and radio industry is one of our great success stories, and public service broadcasters such as Channel 4 are central to that success. Our PSBs sit at the heart of our broadcasting system, delivering distinctive, high-quality content and helping to develop skills, talent and growth across the entire country.

However, the broadcasting world has changed beyond recognition in recent years. Rapid changes in technology and the rise of American streaming giants such as Netflix, Amazon Prime and Disney+, not to mention YouTube and social media platforms, have transformed audience habits. Viewers can watch what they want, when they want, on their laptop, phone, smart TV or Fire stick. As a result, while streaming services have enjoyed a 19% increase in subscribers in recent years, the share of total viewers for linear TV channels such as the BBC and ITV has fallen by more than 20%.

The Government are determined to protect the role of PSBs in our nation’s economic, cultural and democratic life, and to make sure that they remain at the heart of our broadcasting system no matter what the future holds. Tomorrow, therefore, we will be publishing a White Paper that proposes major reforms to our decades-old broadcasting regulations—reforms that will put traditional broadcasters such as the BBC, ITV and Channel 4 on an even playing field with Netflix, Amazon Prime and others, and enable them to thrive in the streaming age. We will set out the full details of our proposals when the White Paper is published.

It is important to understand that the sale of Channel 4 is just one part of that major piece of reform. Like the rest of the White Paper, it is a reflection of the transformation that broadcasting has undergone in the last few years and the need to make sure that our PSBs can keep pace with those changes.

Channel 4 has done a fantastic job in fulfilling the original mission that it was set by the Thatcher Government: to spur independent production and deliver cutting-edge content. The independent production sector has exploded in the last few decades, growing from a £500 million industry in 1995 to an industry of approximately £3 billion in 2019. However, since it was structured to address the challenges of the 1980s, there are limits to Channel 4’s ability to adapt to the 2020s and beyond.

The sell-off of Channel 4 is an important matter for Parliament, yet instead of a statement we had announcement by tweet during recess, and now we hear that a White Paper is to be published tomorrow, when we will not be here and there will not be an opportunity for statements. Where is the Secretary of State to defend her policy today? It is a pattern, and it is a disgrace. Nothing screams rudderless Government like fixating on the governance of Channel 4 while people’s energy bills are going through the roof. It did not even make the list of pretty bad ideas discussed at yesterday’s Cabinet.

Why sell off Channel 4, and why now? Is it because there is an overwhelming clamour from the public? The Government still have not published the 60,000 consultation responses, but my understanding is that the vast majority were against any sale. Is it to help level up the country? Given that Channel 4 commissions half its budget outside London, creating a pipeline of talent across the nations and regions, and stimulating the creative economy in places such as Leeds, Glasgow and Bristol, of course it is not. Is it to create more British jobs in our world-leading creative industries? The Minister and I both know that the likely buyers are going to be the big US media companies, looking for a shop window for their own content. That will mean fewer British-made programmes for British audiences and fewer British jobs. Any UK bidder could lead to less competition, and of course they would be looking at economies of scale.

Is it to support the independent production sector? Channel 4 is currently, uniquely, a publisher-broadcaster, allowing start-ups and independents to retain the value of their own programmes, helping them grow and export. No buyer is going to continue with that model. That is why the UK independent production sector is so overwhelmingly against the sell-off. Or is it to save the Treasury money? I know that the Secretary of State was a bit confused about this in front of the Select Committee, but Channel 4 does not cost the taxpayer a single penny. Indeed, its profits are all reinvested in British jobs and programming.

I really do need to remind both Front Benchers that in an urgent question the Minister has three minutes, the shadow Minister has two minutes, and the SNP spokesperson has one minute. [Interruption.] No—if it is a statement, it is different. I call Minister Lopez.

Thank you, Madam Deputy Speaker. It is important to say that tomorrow is a sitting day, and we bid for a ministerial statement on this subject.

We are very keen that the House understands that the Channel 4 sale is not a stand-alone issue; it sits within a very important series of reforms that we as a Government want to make to the public service broadcasting system. Channel 4 is an incredibly important economic asset in that ecosystem, and we want to make sure that it is sustainable not just now but long into the future. We think it is our responsibility as the Government to do that future-gazing and to make sure that Channel 4 has the freedom and flexibility it needs to be able to make changes to thrive.

There are two important things to understand about Channel 4. First, it cannot retain control of its own intellectual property, and therefore it does not have the same financial flexibility as the likes of ITV and the BBC, both of which have their own studios. Secondly, its borrowing sits on the public balance sheet, and therefore if it required greater financial flexibility in the future, the Treasury would need to be content with that.

As I say, tomorrow is a sitting day. We had very much hoped that we would be able to set the sale of Channel 4 in the context of a wider series of incredibly important reforms that we wish to make to the public service broadcasting sector. I regret that the hon. Member for Manchester Central (Lucy Powell) does not think this is an important issue and has dismissed it as some culture war. That could not be further from the truth. The last time that important broadcasting reforms were made was 2003. I hope she will agree that the broadcasting world has changed immeasurably since then, and that the Government would not be responsible if we did not address some of those changes.

We think the public service broadcasters play an incredibly important democratic, cultural and economic role in our nation’s life and we want to sustain that role, so we think the privatisation of Channel 4 is an important part of a wider series of reforms. We will make further details available to colleagues, and I will be engaging one-to-one with colleagues who have concerns as we go forward.

The Minister may or may not have been convinced by the words that she read out, but I do not think that they convinced the House. Channel 4 is in the best state that it has been in creatively or financially for decades. We were told that it is supposed to be able to compete with Netflix, but Netflix is a loss-making, debt-ridden business whose share price is now $198 when it was $700—an enormous drop.

If the choice for the country is about Channel 4’s specific remit and structure as a publisher-commissioner that does not hold programme rights, the Government could do best by leaving it alone. If they do not, they could engage with Channel 4’s management team about its proposals—I am not sure that we have all seen them in public—and explain why they prefer to go to the United States than to have a state broadcaster that is independent of Government.

Those in government may not like Channel 4 because it may criticise the Government in its news output, but it is better to be in government and criticised than to be in opposition and cheer.

I thank my hon. Friend for his comments. It is important to understand that the Secretary of State and I went into the entire process with a very open mind—[Interruption.] That is certainly true. We went into this looking at what is best for the public service broadcasting sector as a whole going forward. We looked incredibly carefully at alternatives, and I hope that the material that we will publish tomorrow will assure him of that fact. We think that we can get the right blend by retaining Channel 4’s public service broadcast remit, which maintains its distinct and unique appeal, while enabling it to get the private sector capital investment that it requires to deal with some of the wider challenges presented by the likes of Netflix.

I appreciate what my hon. Friend said about changes in subscriptions. I think that underlines the volatility of the market and the need to be able to compete and invest in content. That is incredibly important. If Channel 4 is to remain uniquely appealing, we need that investment in content, and we believe that the reforms will give it greater sustainability going forward.

I call the SNP spokesperson, John Nicolson.

Well, here we go again: a Secretary of State, oblivious to the unanimous opposition of the sector, is ploughing on with a politically motivated privatisation. She knew so little about Channel 4 that she thought it was publicly funded and had to be corrected by a Tory colleague on camera. Channel 4 costs the taxpayer nothing. The cynical motivation for the policy is simple: it is payback time; it is revenge. The Government hate “Channel 4 News” and its rigorous journalism holding Ministers to account.

The Minister mentioned a Netflix-style model, ignoring the fact that Netflix, unlike Channel 4, loses money—it is currently $15 billion in debt—and does not send war correspondents to Ukraine. Will she therefore listen to the experts, or must we wait for the Sue Gray report, the Prime Minister’s defenestration and the Secretary of State’s replacement?

I thank the hon. Member for his question. I did not suggest that Channel 4 would pursue a Netflix subscription model; I simply made the point that Netflix and others—this is not a Netflix issue alone—are changing the dynamics of the marketplace very rapidly. People now view content in very different ways and I do not think it would be a wise, sensible or responsible approach to leave PSBs untouched and unable to have the flexibility that they need to address some of those fundamental challenges.

The hon. Member made a number of unpleasant comments about the Secretary of State. She is not the first Secretary of State to have considered this question. This is not a Secretary of State-specific point of view but a question that has been live for a number of years. It was looked at previously, and the fundamental changes in the market have only deepened since that time with the move away from linear advertising and the rapid change in viewing habits. She took the responsible decision to look not just at Channel 4 but at how we ensure that public service broadcasters have the flexibility they need to be able to provide the content that we all love. She has done a sensible thing in looking at the decision afresh and dealing with it head on, and she has courage in doing so.

I call the Chair of the Digital, Culture, Media and Sport Committee, Julian Knight.

I am concerned to hear that the media Bill White Paper will be published tomorrow, a day when we may not have an opportunity to see the full details. I hope that we will not have to rely on the media round in the morning to get those details.

On Channel 4 privatisation. I start from the position that everything should be in the private sector unless there is the strongest of cases that public ownership is absolutely essential. I therefore broadly welcome the concept of privatisation, but what assurances can the Minister give me that the privatisation is a game worth the candle? Will it be part of a redesign of public service content ensuring prominence, collaborative working of a whole new order and a continued driver of BBC reform to gradually and safely wean it off the licence fee?

First, I thank my hon. Friend for his engagement on the issue and for the work of his Committee, which the Department very much values. I was able to speak to him about the proposal previously, and I am glad that we have a meeting scheduled for later today, for which my plan had been to take him through some of the wider reforms that we wish to make in the PSB sector and offer him the assurances that he seeks. As he knows from previous conversations, the Secretary of State and I were adamant that the proposal needed to go hand in hand with a creative dividend and a wider set of reforms to make it a success.

The UK has the best broadcasting in the world by a country mile. In so many different genres—drama, comedy and natural history—we lead the world, which is remarkable considering that we are a relatively small economy compared with the rest of the world. Channel 4 is intrinsic to making all of that work because it does something that no other broadcaster in the world ever did: it guarantees diversity through the private sector for everybody. I therefore cannot understand why the Minister would want to dismantle it. Will she say just one thing to me? If she does sell it off, will she ensure that it can be owned only by people who pay taxes in this country?

I agree with the hon. Member about how fantastic our broadcasting sector is—it has unrivalled creativity—and we are seeking fundamentally to preserve that in the reforms that we are making. In this country, we are able to have a great blend of specific public service remits that private broadcasters can deliver, and that is what we would seek to do with Channel 4 going forward, protecting the things that we enjoy and love about it. We believe that any future buyer of Channel 4 would seek to purchase it precisely to tap into the specific markets that it appeals to.

Will they be British?

I will not speculate on the nationality of any company. We will be looking at bidders who share our vision for Channel 4, the important role that it plays in investment in our creative industries and the distinct and unique remit that it has in our country. We can provide further details as the process goes on, but I will not stand here and make commitments and crowd out particular buyers for an important UK company.