Report commissioned by Channel 4 argues privatising broadcaster would be “overwhelmingly negative”
Privatising Channel 4 would be “overwhelmingly negative” and could attract a maximum £500m, according to a new report commissioned by the broadcaster.
The government is currently considering whether to sell off the channel, which is publicly owned but privately funded.
Culture secretary John Whittingdale recently talked up the prospect of selling Channel 4, saying it could leave the channel “better off”.
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Today's report, written by Patrick Barwise of the London Business School and Oxford University's Gillian Brooks, concludes that the privatisation would be bad for “overall economy, the broadcasting ecology and creative industries, technology adoption and commercial innovation, C4’s consumer surplus and advertiser surplus, and wider society”.
The report suggested the most likely buyers of Channel 4 would be existing media businesses seeking to move into, or expand in, the UK. It suggested US companies were most likely.
Read more: Why Channel 4's chief exec finds privatisation talk puzzling
Businesses suggested were 21st Century Fox, Comcast, Disney, Discovery, Liberty, Scripps, Sony Pictures Television, Time Warner and Viacom. The possibility of UK companies BT and TalkTalk being interested was also mooted.
Morning Wire gathered a similar list of candidates last week following interviews with three City media analysts. But they gave the broadcaster a greater value.
Peel Hunt's Alex De Groote suggested it could sell for around £1.5bn, while Liberum's Ian Whittaker suggested the price would be between £500m and £1bn.
Today's report said: “Given the risks and the need for the buyer to make a profit on the deal, a realistic maximum price for C4 based on all these five sources of value in combination (non-programming cost savings, revenue synergies, ‘soft’ synergies, ‘spare’ cash, and increased payables) would be £400-500m – around the same as C4’s £443m book value.
"Anything above this could only come from the buyer’s ability to get more ‘bang for the buck’ (revenue per pound) from C4’s content budget.”
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Commenting on the report, Channel 4 chief executive David Abraham said: “It is vital that the current debate about Channel 4’s future is informed by credible and independent research."
He pointed to recent research from Ofcom, EY and Enders Analysis making the case for Channel 4's current model being "sustainable and as this latest report shows, privatisation could actually make Channel 4’s remit less sustainable and would have a negative impact on the UK economy and UK viewers".