UK government re-examining Channel 4 privatisation plan

Channel 4′s planned privatisation has been thrown into doubt after the new UK culture secretary said she was revisiting “the business case” for selling the publicly owned broadcaster, while at the same time backing an overhaul of BBC funding.

Speaking in her first major interview since she was appointed last month, Michelle Donelan told the BBC on Tuesday that she was “re-examining” the rationale for the proposed sale of the commercially funded broadcaster “to make sure we still agree with the decision”.

While Ms Donelan left open the possibility that she would press on with Boris Johnson’s contentious privatisation plans, the marked change of tone will raise Channel 4′s hopes of finding an alternative solution to a sale, from which the government hoped to raise at least £1 billion.

Ms Donelan, however, spoke in a more forthright manner about the BBC’s licence fee, echoing British prime minister Liz Truss’s support for decriminalising non-payment of the levy.

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BBC finances

Such a reform, which has been explored and shelved by successive Conservative governments, would hit the BBC finances hard just as it struggles with a two-year budget freeze and higher inflation.

“Yes the work the BBC did was unique,” said Ms Donelan, as she praised the broadcaster’s “tremendous” coverage of Queen Elizabeth’s death. “But we do need to make sure the BBC is sustainable in the long term [and] also that we prioritise giving people choice.”

She added that the transformation of the media industry by streaming platforms such as Amazon Prime and Netflix “make[s] you question” whether a licence-fee-funded BBC is sustainable.

Ms Donelan’s culture department is overseeing a busy legislative agenda, which has required hard decisions over what to prioritise, given the limited parliamentary time and political sensitivity of the planned reforms. They span online harms, media, gambling and sport.

Her department has prepared a draft media Bill which, along with the privatisation of Channel 4, includes a sweeping overhaul of broadcasting rules to bring them into the digital age.

Media model

Media executives have been waiting for the draft legislation since before parliament’s summer recess, but Ms Donelan’s comments on Tuesday suggest further delays are likely.

Channel 4 will see her review as potentially reopening debate about alternative reforms to its business model that stop short of a private sale.

Chief executive Alex Mahon had proposed partnering with private investors to increase the broadcaster’s investment in programming while remaining in public hands. Ms Donelan’s predecessor, Nadine Dorries, flatly rejected the plan as unworkable.

The BBC has previously warned that decriminalisation of the licence fee would hit its funding by hundreds of millions of pounds a year, leading to significant cuts to programming and output.

Ex-PM Boris Johnson’s government examined dropping criminal penalties for non-payment of the fee, but eventually shelved the reforms earlier this year. The issue would be part of negotiations over the renewal of the BBC’s 10-year charter, which expires in 2028. – Copyright The Financial Times Limited 2022