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Government Says Netflix And Amazon Are “Eating Channel 4’s Lunch” After Privatisation Backlash

Government Says Netflix And Amazon Are “Eating Channel 4’s Lunch” After Privatisation Backlash

The government says the sale of Channel 4 will help the broadcaster compete with streaming giants Netflix and Amazon, (Alamy)

5 min read

A senior government source has claimed global streaming giants including Netflix and Amazon are “eating Channel 4’s lunch” after a number of Tory MPs criticised plans to sell the publicly-owned broadcaster.

Last night a leaked internal memo from Channel 4 ended months of speculation about its future by confirming the government is proceeding with plans to privatise it.

Launched in 1982 as a publicly-owned, commercially-funded public service broadcaster, it does not receive taxpayer funding but is ultimately owned by the government.

Former deputy prime minister Damian Green was one of a number of senior Conservatives to publicly criticise the move, describing it as “very unconservative,” noting the fact that the channel had been launched under a Thatcher government in the 1980s. 

Former leader of the Scottish Conservatives Ruth Davidson said the sale was “the opposite of levelling up,” while Veteran MP Sir Peter Bottomley said it is “bad for the diversity of television, bad for viewers and bad for independent producers.” 

Meanwhile Labour’s shadow culture secretary Lucy Powell described the move as “cultural vandalism”.

But a government source was dismissive of the detractors, and told PoliticsHome that “privatisation done in a way which protects the public service broadcasting remit of Channel 4, and in a way which allows a great British brand to compete is deeply Conservative.”

Confirmation of the sale of the channel will follow a government white paper later this spring and will be formalised in a new Media Bill.

The proceeds from the sale are set to be invested “into levelling up the creative sector, putting money into independent production and creative skills in priority parts of the country,” according to culture secretary Nadine Dorries.

Channel 4 does not have an in-house studio to make its own programmes, and instead commissions all of its content from independent producers. 

It has been a launchpad for a significant range of British talent over the last four decades, something critics of privatisation fear will be compromised if new owners have greater commercial objectives.

The government insider believed those who subscribe to that view "do not really understand the things that are driving this,” and insisted that because the “broadcasting landscape has evolved radically” in the past few years, the channel needed to adapt accordingly.

“These people are saying ‘you don't need to compete against Amazon and Netflix', well those companies are literally eating Channel 4's lunch, it's madness to think that we're not competing with those people in the current age,” they said.

One senior MP in the One Nation group said that unlike some of their "exercised" colleagues, they were unmoved by the DCMS announcement, describing the furore as “a storm in a teacup”.  They told the PoliticsHome a Channel 4 takeover would likely make “very little difference” to how the channel operates.

There have been numerous accusations that government's decision to sell the channel, which across both streaming and television is watched by a greater number of 16-34-year-olds than any other commercial broadcaster, is political. 

Senior Tory MP Julian Knight suggested the move could be “revenge for Channel 4’s biased coverage of the likes of Brexit” and “personal attacks” on Boris Johnson.

“Undoubtedly, across much of the party – there is a feeling of payback time and the word privatisation tickles the ivories of many,” Knight, who chairs the digital, culture, media and sport select committee, said.

The government source dismissed that the sale was driven by "petty party politics". 

“Our view is that the long term future of it is better in private hands – with certain protections," they added. 

“The honest answer is that we're not thinking about what Channel 4 is going to be like in the next two to three years, or what it's going to look like at an election. What we're thinking about is what it's going to look like in a decade or two decades.”

Because Channel 4's funding relies solely on advertising, the government insider reasoned that it hasn't got a “diverse revenue stream”, making it unable to sufficiently invest in digital infrastructure necessary to compete with streaming giants. 

It is understood that leading broadcasters including Sky, ITV, and Paramount have expressed interest in buying the channel on the strength of its high quality production, something the government source said would be "the thing which we would want to protect in the remit of a sale”.

A spokesperson for Channel 4 said it was “disappointing” the announcement was made “without formally recognising the significant public interest concerns which have been raised” during the public consultation on the subject.

They said Channel 4 had recently presented the Department for Digital, Culture, Media and Sport “a real alternative to privatisation that would safeguard its future financial stability, allowing it to do significantly more for the British public, the creative industries and the economy, particularly outside London”.

But the government insider said while they had seen lots of “relatively sensible ideas” from the broadcaster they “weren't the panacea that they were trying to make out”.

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