Up next on Channel 4 – the Media Bill

27 May 2022

Announced in this year’s Queen’s Speech, the Media Bill legislates for Culture Secretary, Nadine Dorries’ plans to privatise Channel 4. DRD’s Samuel Piña draws out what political and regulatory implications the Bill might have.

Image Source:  Leon Neal/Getty Images

The background notes to the Queen’s Speech confirmed the Government’s intention to introduce a ‘Media Bill’ to Parliament. As has been foreshadowed by Ministers, this Bill will contain two main elements: enabling the privatisation of Channel 4, and granting Ofcom new regulatory powers to “ensure the sustainability of the broadcaster”. It is yet to be clarified when we will see the full version of the Bill.

The Government has contended that Channel 4 will be unable to compete in the future as audience habits and technology supposedly evolve beyond the channel’s capabilities. UK-based broadcasters are competing directly with overseas services who threaten to pull the rug out from under them with on-demand services and greater spending power, the theory goes.

Hostile reaction

The reaction has been predictably hostile, with ex-culture Secretary Jeremy Hunt MP saying “Channel 4 provides competition to the BBC on what’s called public service broadcasting… and I think it would be a shame to lose that”. Shadow Culture Secretary Lucy Powell MP went further, describing the move as “cultural vandalism”.

Simon Bevan, Chief Investment Officer of Havas Media Group, expressed concern that if Channel 4 falls into private hands, it will no longer take programming risks that led to the successes of Big Brother and Skins.

Ofcom – awaiting new regulatory powers delivered by the Bill – has yet to comment on the plans, while Channel 4’s CEO Alex Mahon told the Financial Times that she will remain independent during the expected legislative battle, even if the organisation has previously been vocal on the government consultation. Opposition in the House of Lords, in particular, will be intense.

Regulatory minefield

The privatisation bid raises complex questions that go beyond the jurisdiction of the Communications Act 2003 (which directly governs Channel 4). Changing the ownership structure of a media organisation with a major news component triggers significant competition, plurality and national security considerations.

The broadcaster is well-regarded as a counterbalancing force to other news providers by covering stories that other broadcasters might not. Arguably this is made possible because of its status as a not-for-profit publisher-broadcaster. The loss of competition to the BBC, and more generally within the UK market, is expected to be investigated and addressed under the Enterprise Act 2002.

A private owner would ultimately alter the media landscape and could undermine media independence with strong influence over the news agenda. This is bound to create interest at Ofcom who were quoted in the Competition Market Authority’s (CMA) recent code of conduct advice for content platforms. Dame Melanie Dawes, Ofcom Chief Executive, said at the time: “We’re taking a closer look at the potential benefits and threats to media plurality, and will be saying more on this later in the year”, an indication that it may not stay silent on Channel 4 much longer.

"Changing the ownership structure of a media organisation with a major news component triggers significant competition, plurality and national security considerations."

Samuel Piña, DRD Analyst

Dorries conflicted?

The Enterprise Act 2002 provides for the CMA and Ofcom provide competition and public interest advice to the Culture Secretary – currently Nadine Dorries, a fervent advocate of the sell-off plan. Her decision-making powers under the Act are arguably quasi-judicial, and it may be said that her political and decision-making roles create a conflict of interest on this specific issue, and some will call for her to recuse herself.

Change of control as a result of privatisation plans also triggers a national security angle, which may attract the interest of the Department for Business, Energy and Industrial Strategy’s (BEIS) Investment Security Unit (ISU), the operational unit which reviews transactions notified under the National Security and Investment Act 2021 (NSI).

Channel 4’s eventual purchaser will likely notify the ISU because an entity which carries out “the provision of a public electronic communications service” is caught under the Act. Despite Nadine Dorries’ reassuring Parliament that future Channel 4 content will remain distinctively British, the potential impact of a foreign buyer will be fundamental to any judgment by the ISU.

Even without the security implications under the NSI, it is critical to remember the first acts of Ofcom after the Russian invasion of Ukraine which took ‘Russia Today’ off British airwaves. News provision is highly sensitive from a national security and media plurality perspective, and will always attract regulator interest.

What, a carve-out?

The tortured path of the News Corporation/BSkyB proposed acquisition in 2011 led to a proposal to carve out Sky News into a new and independent entity – that was before the whole show collapsed into the hacking scandal and the Leveson Inquiry. Could we see a repeat of this in this case, with Channel 4 News carved out of Channel 4 itself as part of the deal to secure the privatization?