Channel 4 CEO David Abraham tells Tim Dams that privatising the broadcaster would damage the UK’s creative economy
Channel 4 chief executive David Abraham has run the broadcaster since 2010. From the depths of the credit crunch, he has steered C4 through a period of change that culminated last month in it winning the Channel of the Year prize at the Broadcast Awards.
Against this background, the government is weighing up options for C4, including privatisation, in a move that could raise £1bn. Abraham was interviewed on stage by Televisual editor Tim Dams at last month’s Broadcast Video Expo.
Given such a challenging TV landscape, isn’t the government right to seek a buyer for C4? “I have worked all my life in the private sector. Private ownership produces great media. But I am also a believer in what people describe in the UK as a special landscape where we have a mixed ecology – a BBC funded by the licence fee, Sky by subscription, and commercial broadcasters with public service licences like ITV, C4 and C5. In the case of C4, the model is set in stone, in government legislation. We have a remit and it is pretty specific: it says we should operate as a partnership broadcaster – we shouldn’t have inhouse production and should be a stimulant to the independent production sector. So all of the revenue we make from advertising gets spent with 100s of companies. We raise money in the private sector and spend it in the private sector, but spend in a way that helps both the creative economy of the UK and stimulates the viewer…To put Channel 4 News on for an hour at 7pm is not a commercial decision.”
What would happen if C4 went into private ownership? “If we were fully privately owned, [the new owners] would probably stick to the things we do for a while. But, in the end, to improve our profitability – which we would be obliged to do by our shareholders – we would probably look to slice away at that over time. That has been the history of how public service licences have been gamed over time. If you go back to ITV 25 years ago they had a much more onerous public service licence than today.”
You’ve said that a privatised C4 would have to cut costs to deliver profit margins of over 20%? “It is not just the amount of spend, it is how we spend it. Our breakout shows have often been the result of being able to stick with an idea through thick and thin and see it grow. We can afford to be a little bit more patient than you normally would do.”
What would the impact on indie production be? “Some analysts have said that of the £600m or so we spend, there are about 19,000 jobs connected to the work that C4 does. You have to assume that quite a significant proportion of the jobs would be at risk if we cut our budgets back. ITV work with less than 100 production companies, we work with over 300. You can see how we would have to change our behavior.”
Where are we in the process now? “C4 exists as a statutory corporation through primary legislation. So if the government gets to the point where it feels it is the right thing to do, there would have to be a debate in parliament, a vote and undoubtedly it would go through the Lords. We’re quite early in the process.”
But has C4 a long-term future on its own, given the changing viewing habits of younger viewers? “In a good way, that is what keeps us awake at night. The performance of the business over the last 20 years in responding to various changes has been quite good. We were very early on with digital channels: Film4 and E4 went ahead of the ITV and BBC digital channels. We have a very similar overall share today that we had 20 years ago. More recently what we have done is focused on the central question, which is really one of disintermediation… I was determined that we went on a journey to connect to individual viewers. When you go to All4, you are invited to register. That gives us a great relationship to more viewer behavior, and allows us to personalise what you are watching. We are seeing very strong growth in demand for online video because we have quality video and also have first class data. We now have 13m people in the UK registered with us.”
What percentage of C4 revenues come from online? “It’s getting towards 10% of our total revenue. We have already been through one revolution. About a third of our revenue comes from our digital channels, which didn’t exist at the beginning. So we have gone through three big stages of evolution; one was analogue single channel to portfolio; second was digital catch up services; and now All4 as a data-driven multiplatform service.”
CV
1984 Begins career at ad agency Benton and Bowles, going on to found St Lukes
2001 General manager of Discovery UK
2005 President of TLC at Discovery USA
2007 CEO of UKTV
2010 CEO of Channel 4
On US ownership of UK TV companies: “In America you can’t own a big media asset unless you are an American citizen. They are quite happy to protect their own assets, but we are a smaller country with a more open market”
On BBC3’s move online: “We believe in a flexi-linear future. To make shows famous, you are often best off putting them on a terrestrial channel to get people to sample them.”
On commissioning: “Genres don’t operate in silos any more. Our genre teams share ideas at early stages together. Some of most distinctive shows have been the result of counterintuitive choices between genres.
Abraham was speaking at BVE in a session arranged by industry charity the Cinema and Television Benevolent Fund (CTBF)
Tim Dams
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