Channel 4 chairman concerned by Five merger proposal

Merging Channel 4 with a rival commercial broadcaster would amount to ‘part-privatisation by stealth’, the channel’s chairman Luke Johnson has warned.

In a keynote speech at the Media Summit in London yesterday, Johnson said that although Channel 4 was “genuinely open-minded” about ways of securing its future, there was a clear conflict between C4’s public service ethos and Five’s commercial duty to shareholders.

And he said he did not think there was any appetite in Westminster for Channel 4, which celebrated its 25th anniversary in 2007, to be fully privatised.

“There has been a conspiracy theory that I was appointed with a brief to see through the privatisation of Channel 4,” Johnson told delegates.

“But that belief doesn’t really stand up to scrutiny. What would be the point of being the person who sold off Channel 4 so it became just like any other purely commercial TV station?”

Channel 4 has warned it faces a £150m-a-year funding deficit by 2012. It has cut 200 jobs since last September as part of a £50m-a-year cost saving programme.

Communications minister Stephen Carter is examining a number of options to secure its future, and partnership talks between C4 and BBC Worldwide are said to be in progress.

Johnson said he did not believe a tie-up between Channel 4 and BBC Worldwide would require primary legislation by parliament.

But he added that another option on the table – a merger between C4 and a commercial broadcaster such as Five – was not ideal.

“The board of Channel 4 is concerned that there is an inherent conflict between maximising public service and profit – as ITV’s long flight from seriousness and diversity in programming demonstrates,” he said.

“I worry that profit-seeking shareholders would sign up to all sorts of PSB commitments as a price of gaining a stake in Channel 4 – and then lobby to remove them.

“I also fear that part-privatisation by stealth of Channel 4 would mean there could only ever be one buyer for the rest – at a discount – and that taxpayer value would therefore be destroyed.”

Johnson added a tie-up with the BBC’s commercial arm was the “best bet so far in my opinion”.

BBC Worldwide’s profits are reinvested in programme-making, providing an additional source of revenue on top of the £3.4bn licence fee.

“No wonder the BBC does well – with that degree of funding it would be a scandal if they did not,” Johnson said.

“The BBC very cleverly manages to perpetuate the myth that it got an unfair settlement in the last round of licence negotiations.

“They should trying having to survive in the marketplace – then they would know what a tough settlement was like.”

Lord Carter’s final report on Digital Britain is expected in the early summer.

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