Channel 4 commissioning fewer shows during 'really tough year'

Channel 4’s chief executive Alex Mahon said the broadcaster is having “a really tough” year, amid the largest downturn in advertising revenue since the 2008 financial crisis, and it is commissioning fewer shows.

She said the state-owned company will record a deficit this year but it will not become dependent on taxpayer-funded subsidies, when she spoke to Parliament’s Culture, Media and Sport Committee.

Dr Mahon claimed Channel 4 may need to use a £75m credit pot provided by the government as current rules prevent it from bringing in investors.

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Damian Green MP asked her whether that would be “embarrassing” for the Leeds-based broadcaster to use that money after it resisted plans for privatisation, which were scrapped in January, and insisted it could compete in a media landscape dominated by the likes of Netflix and Amazon.

Channel 4's hit show The Great British Bake Off (Photo: Mark Bourdillon/Love Productions)Channel 4's hit show The Great British Bake Off (Photo: Mark Bourdillon/Love Productions)
Channel 4's hit show The Great British Bake Off (Photo: Mark Bourdillon/Love Productions)

“We’ve just had three years of unprecedented surpluses, but this year will be a deficit and next year will probably be a deficit,” said Dr Mahon.

“We will always be exposed to the realities of the UK economy and that is what’s happening now with the advertising market. At the same time, the Channel 4 model is very sustainable.”

She also said the broadcaster has a long-term plan to capitalise on growing demand for streaming services and increase income from digital advertising, which currently accounts for around a quarter of its revenue.

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Channel 4 recorded a £3m surplus last year, when it spent a record high of £713m on content. It received £1.14bn of revenue, with around 70 per cent coming from traditional TV advertising.

Channel 4 chief executive Alex MahonChannel 4 chief executive Alex Mahon
Channel 4 chief executive Alex Mahon

But Dr Mahon, who has dismissed claims she is quitting her role, said the broadcaster is now cutting back on buying shows from independent production companies because advertising revenue has fallen by around 8 per cent.

She said the move has been “really difficult” for companies across the country who rely on commissions from Channel 4, but denied claims there has been a commissioning freeze.

“There were a number of shows that producers expected to be recommissioned but we had to decide we couldn’t,” she said. “Some of them are things we are still looking at. They may return next year or the year after.”

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John Nicolson MP claimed production companies are “deeply unhappy” as “virtually no new commissioning has been happening over the last six months”.

It comes as the Media Bill is due to change Channel 4’s model and allow it to make some of its own programming.

Dr Mahon said the broadcaster is looking to introduce in-house production in a “controlled way” so it does not cause further damage to struggling independent producers, but said the programming will not make significant amounts of money unless it is sold to rivals.

Sir Ian Cheshire, Chair of Channel 4, said executives will get bonuses for this year but the amount they receive will be linked to the broadcaster’s performance.

Dr Mahon, who received a salary of £1.49m last year, then refused to say whether she will accept a bonus.