Channel 4 has outlined its plans to deal with the economic impact of the Coronavirus on its business that include reducing the content budget by £150m, furloughing 10% of staff and board member pay cuts.
Channel 4 is dependent on advertising and predicts that the TV ad market is set to be down in excess of 50% over April and May with future revenues also down.
Plans announced by Channel 4 to deal with falling revenues include reducing the 2020 content budget by £150m. Channel 4 says this reflects both the difficulties of producing programmes and films in the current environment, as well as delays or cancellations of some content across Channel 4, E4 and More 4 across the year. Channel 4 will still commission and develop content for 2020 and 2021 – with ringfenced funding for small, Nations & regions and BAME-led independent producers .
The broadcaster is also opening discussions on furloughing around 10% of Channel 4 staff whose roles are impacted by the current circumstances.
All executive and non-executive board members are also taking an immediate voluntary 20% pay cut. The 2020 bonus scheme for executive directors is also suspended.
A further £95m of savings will be achieved across the organisation through a full review of planned projects and investments, including a reduction in marketing budgets.
Channel 4 has also drawn down on the commercial £75m revolving credit facility (RCF) that has been in place since 2018.
There will also be a full recruitment freeze for all but business critical roles and a review of all third-party costs.
Alex Mahon, Channel 4’s CEO said: “Over the last few weeks Channel 4 has demonstrated the importance of its role as we have helped navigate our audience, particularly young and hard to reach viewers, through these challenging times – with record viewing figures for Channel 4 News including over 200 million views to our news content on social media, and our ‘Stay at Home’ on-screen graphic reaching almost two thirds of the UK population.
“However, as a commercially funded business the Covid-19 outbreak has had a severe impact on our advertising revenues and so we are taking action now to manage our costs appropriately and ensure that we both protect our staff and our ongoing ability to serve our audience.
“We know that these are exceptionally challenging times for everyone in the UK, particularly many of the producers, talent and freelancers we work with across the television and creative industries and we are committed to safeguarding our long-term ability to invest in distinctive and challenging content and create jobs and opportunities in the sector across the UK.”
Ian Katz, Channel 4’s Director of Programmes set out further details of his commissioning strategy .
“We currently expect the overall 2020 content budget to be reduced by £150m. This will reflect both the delay of programmes which have been unable to be produced due to the circumstances and a number of shows which will regrettably have to be cancelled. This will impact the whole portfolio with with a number of new shows on E4 also postponed or cancelled.
“We will still be seeking new shows for both 2020 and 2021, though as a result of the budget reduction this is likely to be at a slower tempo over the next few months. We remain committed to responding creatively to the coronavirus crisis – and we will be spending over £10millon on shows capturing the impact of the pandemic, helping viewers through lockdown and keeping them entertained. At least 50% of this spend will be committed to small, Nations & Regions or BAME-led production companies.
“To support the independent production sector and those who work in it through this challenging time – and to ensure we have a continued pipeline of ideas coming through for the end of this year and into 2021 – we will also ringfence £3million of development funding across 2020, and at least 50% of this will be prioritized for small, Nations & Regions and BAME-led producers.
“The coronavirus crisis has hit all commercial broadcasters with a double whammy of lost production and dramatically reduced revenues but it also poses a profound creative challenge which our indie partners have risen to with remarkable ingenuity, speed and resourcefulness.
“Despite the significant impact on our revenues we believe it is of vital public interest that Channel 4 remains able to editorially respond to this unprecedented crisis so we will be continuing to commission shows that capture the impact of the pandemic on our society, address our viewers concerns and help them get through this difficult period.
“We recognise that this is a desperately challenging time for all our colleagues in the production sector, particularly smaller indies and freelancers, and we believe we can support them best by continuing to commission shows and developing brilliant new ones for next year, and we will be ringfencing half of both our remaining 2020 origination and development spend for small, BAME and Nations and Regions firms.
“Over the next couple of weeks our commissioners will be discussing with production partners what types of content will best serve audiences as we emerge from the crisis and into next year and we will be offering more detailed briefs on what we are looking for in 2021 later this month.”
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