Channel 4: 2019, 2020 and beyond
Channel 4’s 2019 results were solid but unsurprisingly, greater interest is in how the broadcaster has fared in 2020, and what this might mean for its future.
Despite very grim early forecasts, Channel 4 has seen advertisers rush back, with ad revenue likely to only be down 8-10% YoY. Compared to the estimates of −25% to −40% at the height of the pandemic, this is almost cause for elation.
2021 will arrive with a tough comparator in Q1, however COVID-19 has materially accelerated Channel 4’s transition to digital through shifts in viewing behaviour, an existential project that the broadcaster hopes will be supported by changes to its commitments as a result of the upcoming PSB review.
Related reports
Channel 4’s balancing act: 2018 annual report
11 June 2019Mindful of the uncertain future effects of ongoing events, most notably the stagnating TV ad market and the costs of establishing an HQ in Leeds, Channel 4 returned a £5 million pre-tax surplus in 2018, which after investment in Box left its cash reserves at £180 million
Increased digital revenue more than made up for the anticipated drop in spot advertising and sponsorship (with group viewing share and SOCI down) while cautiousness necessitated lower content spend (down 5% from the peak in 2016); a concern given rising content costs
Nevertheless, Channel 4 is doing a good job delivering its remit in a tough environment, continuing to broadcast programming no-one else would and leveraging long-standing relationships to nurture television and film of a quality and ingenuity that belies the modest size of the organisation
Channel 4: relocation and dislocation
15 August 2017Channel 4 revenues and content spend hit record levels in 2016, but the company faces a declining TV advertising market in 2017 due to a weaker economy and competition
The company’s ability to deliver its unique remit to audiences and producers is also under pressure from Government proposals to move staff outside London
Because Channel 4 can only commission, a move will not stimulate a creative cluster. Risks to the remit include the loss of talent and lower content spend due to higher opex
Broadcast television: Troubling trends in lockdown
10 June 2020Even with lockdown continuing and competition for time still almost non-existent, linear viewing is heading back towards 2019 levels after its big, early boost
The inevitable fatigue around COVID-19 news, along with the growing staleness of the TV schedule caused by content supply struggles, are behind the decline
Unmatched TV set use, made up predominantly of streaming and gaming, has held onto much of its growth, not affected by many of the challenges that linear schedules face. This trend will inform future viewing patterns
COVID-19 has led to an unprecedented decline in advertiser demand for TV, and while the steepest drop has occurred, broadcasters will feel the impact over a long period of time.
Programming costs are being cut or deferred, but it is not possible—or even sensible—to reduce total programming budgets significantly in the mid-term due to existing contractual commitments.
Increased government support in the form of advertising spend, a loosening of Channel 4's programming obligations—the lifeblood of the independent production sector—and revisions to existing measures (to capture a greater proportion of freelancers) will be required to ensure a flourishing, vibrant sector for the future.
Netflix: Looking towards 2025
3 June 2020Netflix had an excellent first quarter in 2020 with the tail end encompassing lockdown and likely eliminating churn, as usage exploded
Looking forward, there are lessons to be learnt from Netflix's performance in the US market, which is maturing and stabilising: we model strategy around pricing, content spend and subscription-tier mix
However, differences in other markets remain stark—such as the varying propensities to absorb price rises, and the attachment to locally-produced content
Channel 4’s balancing act: 2018 annual report
11 June 2019Mindful of the uncertain future effects of ongoing events, most notably the stagnating TV ad market and the costs of establishing an HQ in Leeds, Channel 4 returned a £5 million pre-tax surplus in 2018, which after investment in Box left its cash reserves at £180 million
Increased digital revenue more than made up for the anticipated drop in spot advertising and sponsorship (with group viewing share and SOCI down) while cautiousness necessitated lower content spend (down 5% from the peak in 2016); a concern given rising content costs
Nevertheless, Channel 4 is doing a good job delivering its remit in a tough environment, continuing to broadcast programming no-one else would and leveraging long-standing relationships to nurture television and film of a quality and ingenuity that belies the modest size of the organisation
Channel 4: relocation and dislocation
15 August 2017Channel 4 revenues and content spend hit record levels in 2016, but the company faces a declining TV advertising market in 2017 due to a weaker economy and competition
The company’s ability to deliver its unique remit to audiences and producers is also under pressure from Government proposals to move staff outside London
Because Channel 4 can only commission, a move will not stimulate a creative cluster. Risks to the remit include the loss of talent and lower content spend due to higher opex
Broadcast television: Troubling trends in lockdown
10 June 2020Even with lockdown continuing and competition for time still almost non-existent, linear viewing is heading back towards 2019 levels after its big, early boost
The inevitable fatigue around COVID-19 news, along with the growing staleness of the TV schedule caused by content supply struggles, are behind the decline
Unmatched TV set use, made up predominantly of streaming and gaming, has held onto much of its growth, not affected by many of the challenges that linear schedules face. This trend will inform future viewing patterns
COVID-19 has led to an unprecedented decline in advertiser demand for TV, and while the steepest drop has occurred, broadcasters will feel the impact over a long period of time.
Programming costs are being cut or deferred, but it is not possible—or even sensible—to reduce total programming budgets significantly in the mid-term due to existing contractual commitments.
Increased government support in the form of advertising spend, a loosening of Channel 4's programming obligations—the lifeblood of the independent production sector—and revisions to existing measures (to capture a greater proportion of freelancers) will be required to ensure a flourishing, vibrant sector for the future.
Netflix: Looking towards 2025
3 June 2020Netflix had an excellent first quarter in 2020 with the tail end encompassing lockdown and likely eliminating churn, as usage exploded
Looking forward, there are lessons to be learnt from Netflix's performance in the US market, which is maturing and stabilising: we model strategy around pricing, content spend and subscription-tier mix
However, differences in other markets remain stark—such as the varying propensities to absorb price rises, and the attachment to locally-produced content