- UK’s Channel 4 cuts funding to programming and operational expenses by £245
- Covid-19 “has had a severe impact” on the broadcasters ad-revenue, says CEO
- C4 plans to spend over £10 million on shows capturing the impact of the pandemic
UK broadcaster Channel 4 has confirmed it will slash its content budget as ad-revenues drop due to the coronavirus pandemic.
The broadcaster also announced plans to furlough 10% of its staff using the government-backed furlough scheme as part of initial measures to mitigate the impact of the virus.
The plan to navigate the organisation through the impact of Covid-19 crisis was announced yesterday with the broadcaster pointing to the TV ad market which is predecited to decline in excess of 50% over April and May.
Channel 4 said in a statement it plans to “maintain support for creative sector with continued commissioning and ringfenced spend and development funds for small, nations and regions, and BAME-led indies.”
It will cut its content budget by £150 million with a further £95 million of additional savings targeted across the organisation. The company’s executive and non-executive board members are taking a voluntary 20% pay cut and will suspend 2020 bonuses.
Despite C4 being publicly owned and run as a non-profit organisation which invests its available income into commissioning content, it is entirely commercially funded with the vast majority of revenue coming from television and digital advertising.
C4 chief executive Alex Mahon said: “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 UK population.”
Mahon acknowledge that Covid-19 “has had a sever impact on our advertising revenue” and as such the action outlined is aimed at managing the costs appropriately to ensure staff are protected and its audience is served.
She added: “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.”
As a result of its content budget cuts the broadcaster said it will reflect both the delay of programmes which have been unable to be produced due to the circumstances and a number of shows which will have to be cancelled.
C4 director of programmes Ian Katz said: “This will impact the whole portfolio with a number of new shows on E4 also postponed or cancelled.”
However, it continues to seek new shows for the remainder of this year and 2021 at a “slower tempo over the next few months,” he continued. “We remain committed to responding creatively to the coronavirus crisis – and we will be spending over £10 million on shows capturing the impact of the pandemic, helping viewers through lockdown and keeping them entertained.
“At least 50% of this spend will be committed to small, Nations & Regions or BAME-led production companies.”
Over the last two weeks C4 has commissioned a range of programming in response to the crisis and a number of shows to help the nation through their enforced time at home.
The channel has also commissioned a number of factual and current affairs programmes which will reflect the full impact of the pandemic on the UK.
Katz added: “Over the next couple of weeks our commissioners will be discussing with production partners what types of content 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.”
C4’s immediate financial measures
All executive and non-executive Board members have taken an immediate voluntary 20% pay cut. At the request of the executive Board members the remuneration committee has decided to suspend the 2020 bonus scheme for executive directors.
We expect to reduce the 2020 content budget by £150m. This reflects both the difficulties of producing programmes and films in the current environment, as well as some extremely difficult decisions to delay or cancel some content across Channel 4, E4 and More 4 across the year. Channel 4 will maintain its support for the creative sector – continuing to commission and develop content for 2020 and 2021 – with ringfenced funding for small. Nations & regions and BAME-led independent producers (further details below).
A further £95m of savings will be achieved across the organisation through a full review of planned projects and investments, including a reduction in marketing budgets.
In order to provide additional liquidity and working capital through this unprecedented economic period we have drawn down on the commercial £75m revolving credit facility (RCF) that has been in place since 2018.
We remain focused on safeguarding the jobs and protecting the livelihoods of Channel 4 staff but have undertaken a comprehensive review of our people costs, which will include a full recruitment freeze for all but business critical roles and a review of all third-party costs.
Additionally, we will participate in the government’s Coronavirus Job Retention Scheme and today we will be opening discussions on furloughing with around 10% of Channel 4 staff, whose roles are impacted by the current circumstances.
- Read more: Reporting live: Contingency broadcasting