Government officials told Channel 4 to delete parts of annual report 'at odds' with privatisation

Email exchanges between the Department of Culture, Media and Sport and Channel 4 released under Freedom of Information laws reveal Government officials sought a total of ten changes to the annual report - including removing three separate references to the broadcaster’s “long-term sustainability”.

The released emails reveal department's most senior civil servant, Permanent Secretary Sarah Healey, was aware of the attempt to make changes. DCMS did not answer whether Culture Secretary Ms Dorries or other ministers had been aware of the issue at the stage or when they became aware.

The Government is seeking to sell off Channel 4 in a move that could net over £1bn on the grounds that doing so would be better for the broadcaster’s long-term future. Currently, the publicly-owned channel is funded through advertising revenue.

In April, Ms Dorries said she believed “government ownership is holding Channel 4 back from competing against streaming giants like Netflix and Amazon” and added that privatisation would give Channel 4 “the tools and freedom to flourish and thrive as a public service broadcaster long into the future”.

DCMS admitted in July that it had sought changes to the wording of the annual report after the channel’s chief executive Alex Mahon told MPs its publication had been delayed due to a behind-the-scenes row about its content.

The annual report was ultimately published without changes and showed the Leeds-based broadcaster’s revenue had surpassed £1bn for the first time in its history with a record pre-tax surplus of £101m and net assets of £566m.

A Freedom of Information request by The Yorkshire Post has now revealed that on June 9 a senior DCMS official sent an email to Channel 4 setting out a series of suggested changes to the wording of the report.

The email, from an official whose name has been redacted in the FoI response but whose job title is deputy director of television policy, reads: “Having now reviewed the draft I would like to raise some concerns on the substance of the report.

“As you know in April we set out the Government’s position that now is the right time to pursue a change of ownership of Channel 4, and following that it was announced in the Queen’s Speech that legislation would be brought forward to facilitate the sale.

“Some of the language in the report seems at odds with the Government’s clear position and the reassurances we have had from the board and management that you are open to working with us.

“I have attached a table setting out our specific areas of concerns and suggested changes. Until these issues have been addressed I’m afraid that I can’t put the report to Ministers and so can’t commit to a timetable for publication.”

Ten different changes sought in Government 'suggested action' table

The attached table contained 10 changes DCMS wanted to the report, alongside “suggested action” the department felt would be appropriate.

The first change sought was to the opening title of the report, which read ‘More than one side to every story’ above a picture of Channel 4 chairman Sir Ian Cheshire and the start of his introductory statement.

The Government note read: “Although it doesn’t explicitly refer to what ‘the story’ is, given the ongoing discussions around privatisation, can be construed to mean the Chair is not fully supportive of the Government’s decision. Suggest change title.”

Two references in Sir Ian’s statement about Channel 4’s long-term sustainability were also highlighted.

In both cases, the Government note read: “Suggest remove the highlighted sentence: the Government has made its position clear on C4’s long term sustainability.”

In regard to a further reference in the financial review section of the report which stated that balance sheet improvements “only serves to underline Channel 4’s long-term sustainability”, the Government note read: “Remove highlighted text, Government’s position on long term sustainability has been made clear.”

Another change sought to Sir Ian’s statement was a reference to the legislative process for privatisation being “lengthy”. The Government note read: “Suggest remove the highlighted word: there is no basis to state the legislative process will be lengthy.”

DCMS also sought the removal of a later mention in the notes of the report about the legislative process being “lengthy”.

Substantial changes were also sought in relation to chief executive Ms Mahon’s statement.

One passage from Ms Mahon which DCMS wanted to be removed read: “In our engagement with Government, we proposed a vision for the next 40 years of Channel 4, which we were confident would allow us to build on the successes of the first 40. That vision was rooted in continued public ownership, and was built upon the huge amount of public value our model has delivered to date – and the opportunity to deliver so much more in the future.”

The Government note read: “Factually incorrect, no vision for the next 40 years was offered – Next Episode was a 10 year plan. Suggest remove highlighted sentences, Government decision has been made.”

When the Next Episode document was published by Channel 4 in May 2022, it had in fact stated that it was an outline of proposals to “ensure Channel 4 can thrive over the next 40 years”.

In another part of Ms Mahon's comments, the Government note highlighted two sentences it considered contentious.

The first read: “But ultimately, the ownership of Channel 4 is for Government to propose and Parliament to decide.”

The second, which was part of a longer sentence, said: “Our job is to deliver what Parliament tasks us to do, and if or when that changes….”

The feedback read: “Suggest remove highlighted sentences, Government decision has been made. The Chair has committed that C4 will cooperate with Government on sale preparation.”

DCMS also wanted the removal of a sentence in the strategic and financial outlook and viability section of the report which said: “Following the Government’s White Paper published in April 2022, setting out its intention to proceed with the privatisation of Channel 4, management’s focus remains on delivering the Future4 strategy and our public service remit.”

The Government feedback on this sentence read: “Could imply C4 isn’t going to cooperate on privatisation. Suggest either delete sentence or addition to say ‘management’s focus remains on engaging with government and delivering the Future4 strategy and our public service remit’.”

On June 15 after the DCMS deputy director emailed Channel 4 to ask whether the comments on the annual report had been considered, a reply was sent saying the matter was with the chief executive and chairman for consideration.

On June 23, the DCMS deputy director said: “We haven’t heard back from you in terms of our suggested changes to the annual report but as I’m sure you are too, we are keen to get this out before summer recess.

“So in the interests of time, we’re content to lay it as it is, with no changes.”

Details of the attempt to make amendments became public in July when Ms Mahon gave evidence to MPs on the DCMS Select Committee, where she reminded them that Channel 4 is an independent statutory body which is "wholly answerable to Parliament but wholly at arm’s length from Government".

In relation to the requests for changes sought by DCMS, she said: “It is the first time to my knowledge in 40 years that there have been queries about the annual report.”

She also told the hearing that the view about the sustainability of the broadcaster in its current guise was one shared by the independent auditor. Deloitte was appointed to audit the report, with the approval of DCMS.

The Deloitte auditor found the Channel 4 report to be a “true and fair view” of the state of the organisation’s finances.

Ms Mahon told MPs: “It is normal in an annual report for independent auditors to talk about whether the organisation is sustainable, to have a going concern position, to talk about whether you assume the organisation will continue. The auditors had a very strong view on that, as do we. As you know, Government policy is to question whether Channel 4 is financially sustainable. That is the difference of opinion.”

Following Ms Mahon’s Parliamentary appearance, DCMS admitted that it had sought changes but downplayed the significance of their attempted involvement.

A DCMS spokesperson said today the new details becoming public did not change that position. "These documents simply back up what we have already said publically, that during the normal process of discussion we highlighted that some language in Channel 4's report could be interpreted as going against the corporation's commitment, given to both officials and ministers, to refrain from campaigning against privatisation.

"As the owner of Channel 4, the government is fully entitled to comment on the contents of its annual report. It is the government's job to take a long term view on how to best secure the most successful future for Channel 4 in a rapidly changing media landscape and we believe private ownership will give the broadcaster the tools to innovate and grow at pace."

Channel 4 did not wish to comment.

Department's top civil servant copied into key email

The most senior civil servant in the Department of Culture, Media and Sport was made aware of the attempts to make the changes, the FoI response indicates.

Two hours before the table of planned changes was sent to Channel 4 on the evening of June 9, an email from a DCMS representative whose name has been redacted was sent to a Channel 4 employee. That person’s name had also been redacted but appears to be the broadcaster’s chairman Sir Ian Cheshire.

The email, entitled ‘Next steps’, has been largely redacted by DCMS but does show the department’s permanent secretary, who is Sarah Healey, was copied in.

The section of text that has been left unredacted reads: “I mentioned to you on the phone the text in both your and Alex’s updates. We do feel this continues to argue against the govt’s position in a way which is not within the spirit of commitments we have made to one another”.

It adds: “I believe people are discussing precise changes we would like to see in that, so happy to pick up further if this cannot otherwise be resolved.”

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