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Channel 4 privatisation: why does the government want to privatise the broadcaster - who could buy it?

The government argued the long-term future of Channel 4 needs to be secured to be able to compete against streaming services such as Netflix and Amazon

<p>The government has said it will go ahead with plans to privatise Channel 4 (Photo: Getty Images)</p>

The government has said it will go ahead with plans to privatise Channel 4 (Photo: Getty Images)

The government has said it will go ahead with plans to privatise Channel 4, the broadcaster confirmed in a statement.

The government, which currently owns the channel, has been consulting on whether to privatise the broadcaster amid concerns over its survival in an era where streaming services dominate.

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The government has said it will go ahead with plans to privatise Channel 4 (Photo: Getty Images)

Why does the government want to privatise Channel 4?

The government has argued that the long-term future of Channel 4 needs to be secured in order to compete against streaming services.

A statement by the Department for Digital, Culture, Media & Sport (DCMS) said it had made the decision to allow the channel to “thrive in the face of a rapidly changing media landscape”, while a government source said the move would “remove Channel 4’s straitjacket”.

Culture Secretary Nadine Dorries added in a tweet that she wanted the broadcaster to remain a “cherished place in British life”, but felt that government ownership was “holding Channel 4 back from competing against streaming giants like Netflix and Amazon”.

She said: “I will seek to reinvest the proceeds of the sale into levelling up the creative sector, putting money into independent production and creative skills in priority parts of the country – delivering a creative dividend for all.”

The government has been consulting on plans to privatise the broadcaster, which was founded in 1982 to deliver to under-served audiences, in recent months amid concerns over its survival in the streaming era.

The channel receives its funding from advertising, not from the taxpayer.

What has Channel 4 said?

A spokesperson for Channel 4 said it was “disappointed” with the decision, but would “continue to engage” with the government on the process to “ensure that Channel 4 continues to play its unique part in Britain’s creative ecology and national life”.

The channel explained that it had presented the government with an alternative to privatisation that would “safeguard its future financial stability” and allow it to do more for the public, creative industries and the economy.

Channel 4 chief executive Alex Mahon also said in an internal email to staff on Monday (4 April) that they had proposed a “vision for the next 40 years” which was rooted in “continued public ownership” and “built upon the huge amount of public value this model has delivered to date and the opportunity to deliver so much more in the future”.

However, she added that ultimately the ownership of the channel was for the “government to propose and Parliament to decide” and that her priority now was to “look after all of you and the wonderful Channel 4 spirit”.

What will happen next?

The DCMS said further details will be announced “shortly”, while Ms Mahon explained there will now be “a long process ahead”.

Writing to staff in an internal email, she explained it could take 18 months or more for the required legislation to pass through the House of Commons and then Lords.

She said: ““During that time, we’ll continue to work with DCMS and government, and with our supporters across the industry to make the arguments to ensure that Channel 4 can continue to deliver its remit.”

Plans for the sale will be set out in a White Paper later in April and will be included in a new Media Bill for spring 2023, according to reports.

Bids for the broadcaster are expected to come in next year with a view to complete the sale in early 2024, ahead of the next general election expected at latest in May that year, the Daily Telegraph reports.

Who could buy Channel 4?

ITV is understood to be interested in buying Channel 4, according to The Telegraph, while Discovery has held informal talks and Rupert Murdoch has been linked to a possible takeover.

Bids from Sky, Channel 5 owner Paramount, Amazon and Netflix are also possible.

Foreign ownership has also reportedly not been ruled out, providing regulator Ofcom’s “fit and proper” test for ownership is passed.

A price tag has not yet been set by the government, but reports suggest the channel could be sold for as much as £1 billion. Ministers have said they will seek to reinvest the proceeds into the creative industries.