Channel 4 Unveils Financial Measures for COVID-19 Impact

Channel 4 is expecting to reduce its content budget by £150 million, with a further £95 million in cost-savings across the organization, as it looks to weather the financial impact of the COVID-19 pandemic.

While its content spend is being reduced, Channel 4 is still looking for shows for 2020 and 2021, “though as a result of the budget reduction this is likely to be at a slower tempo over the next few months,” the broadcaster said. It will spend more than £10 million on shows focused on the impact of the pandemic and helping viewers through the lockdown. At least half of this spend will be committed to small, nations & regions or BAME-led production companies.

The U.K. broadcaster is expecting the television ad market to be down by more than 50 percent in April and May.

In addition to a reduction on content spend and company-wide cost savings, executive and non-executive board members are taking a voluntary 20 percent pay cut and suspending 2020 bonuses. The broadcaster is maintaining its support for the creative sector through continued commissions, with ringfenced spend of £3 million for development, half of which will go to small, nations & regions and BAME-led indies. Channel 4 is looking to safeguard jobs but is reviewing costs and implementing a recruitment freeze for all but “business-critical” roles. It will participate in the government’s Coronavirus Job Retention Scheme and is beginning discussions about furloughing 10 percent of staff.

“Channel 4 has prudently managed its finances over successive years and is well equipped to navigate normal cyclical pressures on the advertising market, but the unprecedented impact of this crisis on the worldwide and U.K. economy has had a severe effect on the demand for advertising in the U.K.,” the broadcaster said in a statement.

Alex Mahon, Channel 4’s CEO, noted, “Over the last few weeks Channel 4 has demonstrated the importance of its role as we have helped navigate our audience, particularly young and hard to reach viewers, through these challenging times—with record viewing figures for Channel 4 News, including over 200 million views to our news content on social media, and our ‘Stay at Home’ on-screen graphic reaching almost two-thirds of the U.K. population. However, as a commercially funded business, the COVID-19 outbreak has had a severe impact on our advertising revenues and so we are taking action now to manage our costs appropriately and ensure that we both protect our staff and our ongoing ability to serve our audience.

“We know that these are exceptionally challenging times for everyone in the U.K., particularly many of the producers, talent and freelancers we work with across the television and creative industries and we are committed to safeguarding our long-term ability to invest in distinctive and challenging content and create jobs and opportunities in the sector across the U.K.”

Ian Katz, director of programs, noted, “The coronavirus crisis has hit all commercial broadcasters with a double whammy of lost production and dramatically reduced revenues but it also poses a profound creative challenge which our indie partners have risen to with remarkable ingenuity, speed and resourcefulness.

“Despite the significant impact on our revenues, we believe it is of vital public interest that Channel 4 remains able to editorially respond to this unprecedented crisis so we will be continuing to commission shows that capture the impact of the pandemic on our society, address our viewers concerns and help them get through this difficult period.

“We recognize that this is a desperately challenging time for all our colleagues in the production sector, particularly smaller indies and freelancers, and we believe we can support them best by continuing to commission shows and developing brilliant new ones for next year, and we will be ringfencing half of both our remaining 2020 origination and development spend for small, BAME and Nations and Regions firms.”

Katz added that Channel 4 commissioners will be working with production partners over the next few weeks on content that will “best serve audiences as we emerge from the crisis and into next year and we will be offering more detailed briefs on what we are looking for in 2021 later this month.”