Why the move to Leeds could spell trouble for Channel 4

You don’t divide your troops in the face of the enemy says one staffer – especially when times are so tough in TV

LONDON, ENGLAND - DECEMBER 04:  A general view of the headquarters of Channel Four television in Westminster on December 4, 2012 in London, England. The large Channel Four logo in front of their headquarters has been decorated for Christmas with models of characters from  Raymond Briggs' children's book, 'The Snowman'.  (Photo by Oli Scarff/Getty Images

Getty, TL

Channel 4 is putting a brave face on its move to Leeds – talking with great passion and fervour about the new investment in the regions and the work it will do.

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It will, they say, open up C4 to people outside London, stand up for communities and diversity and respond to the hunger for TV content reflecting the breadth of the UK that exists both inside this country and abroad.

It all sounds very fine, and there is a lot of political support for the move, which was announced on Wednesday and comes 15 months after the Government told C4 it must move out of London in its 2017 General Election manifesto pledge.

But it could spell long-term trouble for the broadcaster (when it comes to fruition in five years’ time)  – as many within the organisation acknowledge.

No-one in their right mind would argue that investment outside London is a bad thing. No one is arguing that London should be the centre of the media and TV universe. But Channel 4 really is the wrong broadcaster to use for this initiative, as it argued in its long discussion with Government, when it opposed the plans.

Throughout the discussion, the Government cited the example of the BBC’s launch of a “northern powerhouse” in Salford, where BBC Sport and Radio 5 Live are now based. But C4’s argument was always that the BBC, which is directly funded by the licence fee and not from advertising, has the capacity to facilitate real change in a place like Salford in a way that a “publisher” broadcaster like C4 with no production capacity of its own doesn’t.

C4 commissions all its shows from independent production companies and is dependent on an uncertain ad-funded revenue stream for its survival.

Relocating 300 of its 820 staff who are all in some way or other engaged in commissioning would simply not have a material impact in the way the Salford move did when around 3,000 of the BBC’s 18,000 plus staff went north.

With Salford, the whole gamut of roles – presenters, floor managers, directors, commissioning people and everyone else involved in programme making – moved to the new Salford base. Leeds will attract 300 jobs which is great for the city, but not life changing.

Channel 4 is also facing buffeting winds in the new TV world. While most broadcasters seem to think the key to survival now lies in subscriptions and content production, C4 doesn’t make its own programmes so is reliant on an ad funded model which is very vulnerable to economic downturns

If Brexit causes a recession, then its revenues could fall sharply. Advertising revenues are holding up according to most estimates, but always take a hit during tougher times, as C4 knows to its cost after 9/11. Since then it has established cash reserves of around £200m and has assets worth around £450m. But it could still struggle.

There are people at C4 who are optimistic about the move. But as one staffer there put it to me: ”Times are tough and it’s a war out there with Netflix and Amazon moving in. And in a war you don’t split your troops up in the face of the enemy.”

Other pessimistic voices are even wondering whether this could spell the beginning of the end of the broadcaster.

As another staffer tells me: “The question isn’t about putting a few jobs in Leeds. The urgent question for them is where does C4 sit globally? The Leeds move looks good but it won’t make much impact, either. The numbers involved are too small, it won’t be an economic driver for the city. And when you are ad funded and all of the leading ad agencies are, whether you like it or not, based in London, it doesn’t make commercial sense.”

Time will of course tell.

There are positive things to be said for C4 which is having a good creative time of it – shows like Derry Girls and No Offence are riding pretty high. And Bake Off is providing a useful plank in the schedule. It’s been a critical and commercial success, which (like Big Brother before it) is helping fund the kind of experimental and off-beat programmes C4 was set up to create.

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But splitting your staff in half when times could get really tough across TV? That could be a real problem in the longer term.