Refusal to grant public broadcasting status to Sky or Warner Bros Discovery in Government White Paper is one of a number of carrots that may encourage them to buy Channel 4.
The Sunday Times reports both companies are expected to show interest in acquiring Channel 4. Other companies considering their options are understood to include Channel 5 owner Paramount and French Canal+ owner Vivendi. Strong interest in the company has raised hopes any sale could bring in £2 billion for the Government.
The Up Next Broadcasting White Paper revealed the Government won’t open up public service broadcaster (PSB) designation to new providers. That’s despite successful lobbying by commercial broadcasters to Ofcom in recent months. Ofcom recommended the Government give consideration to opening up the PSB system to allow Sky and Discovery to take part. Sky spent the past two years enhancing its PSB credentials, notably by taking Sky Arts free-to-air.
Sports rights carrot
An attempt to acquire Channel 4 could be even more lucrative if the Government decides to make qualification for listed sports events a PSB-specific benefit.
Technically, the option to acquire listed sports rights is open to any broadcaster who can reach a certain threshold of the UK population. As more TV viewing goes online in the next decade, additional broadcasters are expected to qualify. That’s unless qualification is specifically restricted to PSBs.
By buying Channel 4, Sky owner Comcast or Warner Bros Discovery could gain greater control over UK sports rights. Warner Bros Discovery owns Eurosport and is currently creating a joint sports channel venture with BT.
For potential bidders, securing Channel 4 would also give them a highly prominent position in TV channel lists. The White Paper paves the way for this prominence to be extended to online platforms. As a result, any Channel 4 buyer would have the legal entitlement to feature prominently across connected TV, dongle and streaming stick platforms.
Lifting in-house production restrictions
Channel 4’s perceived monetary value is also now higher with the prospect it will be able to produce its own in-house content. In-house meaning any new owner would be able to show their own content on the channel. At present, all of Channel 4’s programmes are made by third-party, independent production companies.
And the White Paper paves the way to allow Channel 4 to move traditional public service content to streaming-only or one of its other digital channels. This means any future owner could transfer some or all news and current affairs content to another channel to free up Channel 4’s primetime schedule.
C4 Chief Executive Alex Mahon has argued that any income from the sale would be dwarfed by the economic damage caused to the broadcasting industry. The industry fears that smaller independent British producers that rely on Channel 4 would go to the wall. Instead, large US companies would dominate any remaining UK production.
ITV, meanwhile is understood to be looking at its options regarding making a bid for the channel. However, compared to some of the other potential bidders, it’s seen as a relative minnow.
Culture Secretary Nadine Dorries’ recent comments about the “privatisation” of Channel 5 a few years ago may have revealed a Government position. Channel 5 has never been under public ownership. But it was sold US media company Viacom (now Paramount) in 2014. It seems “privatisation” for some actually means selling to an American company. And to help it happen, the White Paper provides many carrots to attract foreign buyers. None of the carrots are carrots for ITV, who already enjoys public service status.
The legislative process now faces a number of parliamentary hurdles which could delay any sale until late next year.
The RXTV Analysis / By Aidan Smith