A sustainable future for Channel 4? David Abraham and Dame Liz Forgan discuss privitisation and public ownership
"If I had to manage a privatised Channel 4, I would shut down Film 4 Productions because it loses money."
These were the words of David Abraham, current Channel 4 CEO, as he explained how he thought possible privatisation would affect the broadcaster, at a Media Society event on Tuesday, June 7.
"British independent film is a difficult area economically," he continued. "We have won seven Oscars in the last five years, but it is an example of how the cross subsidy model is required to deliver the remit."
The discussions about the public service network come less than a month after a new White Paper was revealed to shape the future of the BBC. Yet while BBC shake-ups have dominated the headlines - most notably the prospect of recipes going offline - Culture Secretary John Whittingdale has also commented that Channel 4 could be 'better off' in private hands.
'A sustainable model for the Channel'
He has been keen to stress that such a move would be in Channel 4's interests rather than the Treasury's though, adding: "This is not about raising money for the government [but] about trying to find a model to sustain Channel 4."
However, when quizzed by Dame Liz Forgan, former Director of Programmes from '81 to '90, about how privatisation could work with the broadcasters' remit, Abraham said Whittingdale was only 'fooling himself'.
"What you promise today and what you hope to change later [in the remit] are very different things. Your obligation as a shareholder is to chip away at it."
'Innovative, experimental and distinctive'
Since it's inception in 1982 Channel 4 has been legislated to be "innovative, experimental and distinctive". It receives no public funding, but all profits must be put back into content and all UK programmes must be commissioned from UK production companies.
Abraham also brushed away criticism from Forgan that the remit was a 'humpty-dumpty word', that you can 'make mean whatever you like."
"It is absolutely wrong to say the Channel 4 remit is fuzzy. There are licence obligations which are firm measures, there are aspirations in the remit to do with trying to do things [...] which are not fuzzy because they are broke down in to 40 metrics which are measured on an annual basis.
"We are able to demonstrate in multiple dimensions the degree of distinctiveness. If they're drifting, Ofcom haul us in."
He also claimed the channel's history of success and culture of innovation was down to its unique funding structure. "The incentive structure drives the culture," he added.
"The peer group in the industry expect certain things of you [...] if we're not taking risks, winning oscars pretty much every year, then sooner or later, we will lose our jobs. Those are the expectations set of us. At a privatised Channel 4, the incentives would be very different. I don't make any value judgement about that, just different."
"[At a privatised Channel 4] the first thing I would need to is a have a resolution from Government so I would start delivering profit to shareholders," he continued.
This would mean cutting back on staff and programming spend, as well as selling assets to drive up profits, Abraham claimed. This year the network is aiming to bring in a billion pounds in revenue from advertisers, with £700 million reinvested into programmes.
Not easily understood
But does the public care about Channel 4 in the same way as it does the BBC asked Forgan. And more crucially, does it understand how it works?
"Maybe not," Abraham admitted. "The Channel 4 model [maybe isn't] easily understood or explicable to someone in the street in the same way the licence is. However, if you start explaining to the public that they won't be getting these interesting, fresh, risk taking programmes, or they won't be getting Channel 4 news, you do get the public to pay attention.
"It's clearly not a model that's failing, so why mess with it?"