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C4 chief: ‘Privatisation would devastate creative sector’

David Abraham, Chief Executive of UK public service broadcaster Channel Four, has warned of potentially “utterly devastating” effects on the British creative sector if mooted funding models for the publicly-owned Corporation were to result in ownership passing to international broadcasting interests or ‘asset strippers’.

UK Prime Minister David Cameron confirmed on November 4 that the Government is looking at all options to secure the financial future of the channel, including a private sector sale. Asked during Prime Minister’s Question Time to confirm that the government had no plans to sell off the broadcaster, Cameron said: “I want to make sure that Channel Four has a strong and secure future so I think it is right to look at all of the options, including to see whether private investment into Channel Four could help safeguard it for the future.”

“Let’s have a look at all of the options, let’s not close our minds like some on the opposition front bench who think that, you know, private is bad and public is good – let’s have a proper look at how we can make sure this great channel goes on being great for many years to come,” he stated.

Addressing the Broadcasting Press Guild in London, Abraham suggested that 2016 could potentially be one of the “most seismic” in the history of British broadcasting in over a decade, with the BBC Charter Review, Fox indicating that at some future stage it would seek to take full control of Sky Europe and the possibility of ITV being sold to a US major.

“Those three things alone would be enough for us to say that’s a pretty seismic year, but here we are with Channel Four on the agenda too,” he noted, admitting that privatisation had been on the agenda for the past 33 years since its founding in 1982.

According to Abraham, there were two types of debate: One was the fear that Channel Four was no longer delivering to its remit, with the other being the ‘model in peril’ debate, which argued that Channel Four would become incapable of delivering to its remit from a financial point of view at some point as a result of factors such as digital switchover.

He noted that Ofcom had rejected a merger proposal from PSB Channel 5‘s then owner RTL on the grounds that there would be “clear tensions between the objectives of Channel 5’s sole shareholder to maximise profits and Channel Four’s desire to maximise public service delivery”.

“So, here we are with privatisation back on the agenda,” he said, noting that following the May 210 General Election which saw a majority Conservative Government elected, it would be “no surprise” that a privatisation discussion would be had at some point during this five-year parliament. “For me personally it’s a debate that I’ve never feared and it’s a debate we are going to be fully engaged in.”

Noting that Prime Minister Cameron had publicly expressed his support for and admiration for the broadcaster, Abraham highlighted the PM’s comments regarding the possibility of private investment being part of its future. He saw the possibility of Channel Four being given greater freedom to raise money as a “more positive” starting point than the narrow discussion that suggested state ownership per se was undesirable.

“My fear here is that if the market is trying to tell the Government that a sale of Channel Four is the thing that will maintain its sustainability, there are other ways at looking at this challenge.” He suggested it was well-known that the Government was being courted by international buyers and domestic asset strippers and encouraged it to spend as much time listening to the broadcaster’s viewers, who were saying that it was delivering to the remit “in spades”.

“The challenge for those that wish to buy us is to convince the Government that they can deliver the remit as well as the current management is doing,” he suggested, adding that the framework to hold the private company to account was “challenging” as evidenced by the Ofcom Statement from 2009 which meant that a private company could only be held to account by a regulator through the courts, whereas if Abraham and the current board were failing, then they would simply be removed by the regulator.

“What I’m hearing is that potential buyers of Channel Four are really only seriously interested if they can take production in-house, because that is what will create the multiples for them,” he advised. “What is certain to me is that the impact on the creative economy will be utterly devastating. Working with hundreds of independent companies up and down the UK is central to what makes Channel Four Channel Four. It is essential to the diversity which is at the heart of our remit,” he declared.

“Opposite to this is consolidation, which is what the rest of the market is focused on, which is fine, but Channel Four is here to do something different. We do believe that there are reforms to how the Terms of Trade operate that could be considered in order for us to maintain our model in a digital age, but we have never campaigned and will never campaign for the dissolution of this framework altogether,” he stated.

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