Channel 4 to furlough staff in £245m coronavirus cost-cutting plan
Channel 4 today said it will furlough 10 per cent of staff and implement pay cuts for executives as part of a plan to save £245m during the coronavirus crisis.
The broadcaster warned the TV ad market was expected to plummet 50 per cent in April and May as brands pull their campaigns during the economic downturn.
As a result, the firm said it would today open discussions about furloughing roughly 10 per cent of its workforce.
All board members have taken a 20 per cent pay cut, while this year’s bonus scheme for executive directors has been suspended.
Channel 4 said it expected to reduce its content budget by £150m this year after social distancing measures made it impossible to film and produce TV shows and movies.
The firm said it had also made some “extremely difficult decisions” to delay or cancel some content across Channel 4, E4 and More 4 over the year.
Channel 4 said a further £95m in cost savings would be made across the organisation following a full review of planned projects and investments, including a reduction in marketing budgets.
The public service broadcaster, which is funded by advertising, said it had drawn down on its £75m debt facility to provide additional liquidity and working capital during the crisis.
“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,” said chief executive Alex Mahon.
“We know that these are exceptionally challenging times for everyone in the UK, 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 UK.”
While viewing figures have surged during the pandemic as more people tune in for news and entertainment programming, broadcasters have struggled to convert this into revenue.
Channel 4 director of programming Ian Katz said the company had suffered a “double whammy of lost production and dramatically reduced revenues”.
In a note published earlier this week Enders Analysis warned Channel 4 had “very little headroom in a crisis”, adding it would only be able to fund its current activities for less than a year.
The analysts also urged the government to support the media firm by relaxing its public service broadcasting obligations.
“A lowering of the bar for proportions of original, nations/regions or other expensive types of content should only be a temporary measure given Channel 4’s important role within the sector,” they wrote. “However, if that is what it will take to ensure the broadcaster’s viability then it is necessary.”
Channel 4 said it would continue to commission shows for 2020 and 2021, but said this would happen at a slower pace over the coming months.
The broadcaster added that it will ringfence £3m of development funding this year to support the independent production sector, half of which will be prioritised for small, regional and BAME-led producers.
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