Who pays for Channel 4 and why is the UK Government privatising it?

Channel 4 has said it is “disappointed” that the Government has made the decision without “formally recognising the significant public interest concerns which have been raised”.

The Government, which currently owns the channel, has been consulting on whether to privatise the broadcaster following apparent concerns for its survival in the streaming era.

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A statement from the channel late on Monday stated: “Channel 4 has engaged in good faith with the Government throughout the consultation process, demonstrating how it can continue to commission much-loved programmes from the independent sector across the UK that represent and celebrate every aspect of British life as well as increase its contribution to society, while maintaining ownership by the public.”

The channel explained that it presented the UK Government with an alternative to privatisation that would “safeguard its future financial stability” and allow it to do more for the public, creative industries and the economy.

So why is the Government selling off the channel, and how is it actually funded?

What is the current model?

Channel 4, which was founded in 1982 to deliver to under-served audiences, is currently owned by the UK Government.

However unlike the BBC it receives its funding from advertising, not from the taxpayer.

Channel 4 does not receive public funding. It is funded completely by its own commercial activities, and its financial statements are available to view online.

This was something that startled Culture Secretary Nadine Dorries last year during a committee session, when she claimed that the channel is in receipt of public money. She was corrected by Tory MP Damian Green.

The not-for-profit, publicly owned channel is run by its board, which is appointed by the media regulator Ofcom in agreement with the UK's Culture Secretary. 

So why are the Tories privatising Channel 4?

The Conservatives appear to have been unhappy with the channel for some time. 

In 2019, ahead of the General Election, Channel 4 replaced Boris Johnson with a melting ice sculpture during a debate on climate change when he failed to participate.

In response, a Tory source said the party would review the channel’s broadcasting remit if they won the election – which they did (with an 80-seat majority).

Conservatives believed they had been unfairly treated by the channel, with Tory spokesperson Lee Cain claiming at the time of the ice sculpture incident that there had been a “wider pattern of bias”.

This was not mentioned in the Government's official explanation for the sell-off.

On Monday, a statement by the Department for Digital, Culture, Media & Sport (DCMS) claimed it had made the decision to allow the channel to “thrive in the face of a rapidly-changing media landscape” while a Government source said the move would “remove Channel 4’s straitjacket”.

Dorries added in a tweet that she wanted the broadcaster to remain a “cherished place in British life”, but felt that Government ownership was “holding Channel 4 back from competing against streaming giants like Netflix and Amazon”.

Can the Tories just sell it off?

Yes and no. The privatisation of the channel requires a vote in the Commons, it cannot be unilaterally decided by a minister. 

While the Conservatives have a significant majority that would make losing such a vote unlikely, there have already been signs of discontent with the move among Tory backbenchers, including former culture secretary Jeremy Hunt.

Channel 4 host Krishnan Guru-Murthy explained on Twitter: "For clarity as some facts are being muddled: Channel 4 is state-owned but commercially funded by ads and doesn’t get public money.

"A sell-off requires MPs to vote for it. The editorial independence and funding of news can be ring-fenced in a sale if govt wants."

What's the reaction been like?

The former head of news and current affairs at Channel 4 has said the Government plans to privatise the network to “throw a bit of red meat to Tory supporters”.

Speaking to Times Radio on Tuesday, Dorothy Byrne said Channel 4 was not left-wing, adding: “I think it’s being privatised to throw a bit of red meat to Tory supporters of a very right-wing nature at a time that the Government is in trouble.

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“I think the political agenda is to show that the Government is doing something radically right-wing to please people. It’s the same agenda as attacking the licence fee.

“It’s that knee-jerk thing, privatise thing, that’s a good thing to do.”

Meanwhile, Labour's shadow culture secretary Lucy Powell was unimpressed with the move.

She told BBC Radio 4’s Today programme: “It doesn’t make any sense. I can’t find many people are in favour of it.

“I think it will cause a great deal of damage to jobs and opportunities in the creative industries, especially in Leeds and Bristol, and Manchester, and outside of London.

“I fear that … rather than competing with some of the big US streaming giants, it is more likely to be bought by one of them.

“That will take money out of the UK economy, out of the creative industries and the independent sector that has so thrived under Channel 4.”

Anti-privatisation campaigners We Own It hit also out at the UK Government, branding the move "an act of economic and cultural vandalism".

“The Government is trying to act like they are doing Channel 4 a favour, saying that privatisation is the only way that it can compete with Netflix and Amazon. But this is nonsense," lead campaigner Tom Morton said. 

"Channel 4 isn’t struggling. In fact it's performing above and beyond expectations. It’s a growing, profitable corporation, with hundreds of millions in reserve, and it’s way beyond target to double its digital viewers and revenues.

"The real reason for privatisation is so that the government can yet again take public assets and put them in private pockets and the people who will pay the price for it are working people and small businesses in the regions and nations outside London."