Incorporated: 1981
NAIC: 515120 Television Broadcasting
SIC: 4833 Television Broadcasting Stations
Channel Four Television Corporation (also referred to as Channel 4) is one of the United Kingdom's fastest-growing broadcasting corporations. The company is owned by the British government. Unlike its BBC counterparts, however, Channel Four operates on a commercial, for-profit basis. As such, the company receives no funding from the British government. Channel Four was the United Kingdom's first "publisher/broadcaster." Rather than produce its own programs, the company purchases programming from independent studios in the United Kingdom and worldwide. Once primarily known as a "minority" programmer, Channel Four has adopted a more popular programming style in the 2000s. Among the company's biggest successes has been its broadcasts of the highly popular Big Brother series. The company also operates a film production wing, FilmFour, known for such films as Four Weddings and a Funeral and The Crying Game, among others. Although the Channel 4 station remains the company's core operation, the company has embraced the free-to-air digital television market. The company's digital stations include E4, More4, and Film4. In 2007, the company announced plans to launch a music channel in partnership with EMAP. The company also operates the 4oD video-on-demand services and the FourDocs broadband service, both through its web site. Channel Four has also been preparing an entry into radio broadcasting, through the 4 Digital Group consortium, in partnership with EMAP and others. That group expects to launch ten digital radio stations in 2008. Channel Four is led by Chairman Luke Johnson and Managing Director Andy Duncan. The company posted revenues of £936.9 million ($1.9 billion) in 2006.
The United Kingdom's Fourth Station in 1981
The United Kingdom had just three television stations at the beginning of the 1980s. These included the two state-owned and funded BBC (British Broadcasting Corporation) channels, and a single ITV (Independent Television) channel. All three stations had been launched by the middle of the 1950s. At the same time, plans were made to launch a second independent station. In the 1960s, the country's network of television transmitters added the frequency allotment for the projected channel. By the 1970s the first television sets appeared with settings for the fourth channel, then referred to as ITV/IBA 2. Yet the station itself failed to materialize, in part because of the reigning conflict between the government's desire to limit commercial television broadcasts in the country.
The passage of the Broadcasting Act of 1981 set in motion the development of the future Channel 4. The new legislation created something of a hybrid between the public service model of the BBC stations and the commercially oriented model of ITV. The new channel was to remain a state-owned corporation with a clear public-service commitment. Specifically, the company was established to "appeal to tastes and interests not generally catered to (by other channels), encourage innovation and experiment and be distinctive." In this way, the channel was expected to appeal to "minority" interests, as opposed to the more mainstream offerings of the ITV station. Yet Channel Four Television Company was placed under the Independent Broadcast Authority (IBA), and not the BBC. In this way, Channel 4 was expected to generate its own funding through sales of advertisements.
Channel 4 did not, however, have control of its own advertising sales. Instead, that role was given to ITV, which provided the new broadcaster with its advertising. Channel Four was then provided funding through those revenues. This system enabled the group to carry out its mandate to provide alternative programming, as it was relieved of commercial pressures to develop more popular programming. On the other hand, the system meant that the company did not necessarily receive all of the revenues due to it.
Another important characteristic of the new television entity was its classification as a "publisher-broadcaster." This reflected the requirement that the company source all of its programming from third parties. In this way, Channel 4 singlehandedly stimulated the growth of the independent production industry in the United Kingdom.
Channel 4's official launch came on November 4, 1982. The company's first program, the game show Countdown, also became its longest-running, and remained in production into the 2000s. Because the channel's frequency allotment had been in place for nearly two decades, Channel 4 immediately became available on a national scale. In this way the channel provided coverage across nearly all of the United Kingdom. The exception to this was in Wales, which saw the creation of its own fourth channel.
Toward the Mainstream from 1993
Under Managing Director Jeremy Isaacs, the company developed a strong reputation as an alternative broadcaster. As Isaacs explained to Campaign: "We were encouraged by an Act of Parliament to pursue innovation and experiment and we just gave the nod to things that wouldn't have previously got on British television." Many of the channel's broadcasts inspired controversy. These included the Red Triangle art-house film series, labeled as "pornographic" by some reviewers. Channel 4 also inspired the ire of self-proclaimed public decency advocate Mary Whitehouse.
Yet Channel 4 was also noted for the high quality of much of its programming during the Isaacs era. This included the launch of the popular Brookside soap opera series. Also under Isaacs, Channel 4 launched the Films on Four broadcasts of independent films. These included the highly praised Angel by Neil Jordan.
The next phase in Channel 4's development came under Isaacs' successor, Michael Grade, who took over as managing director in 1988. Grade was charged with increasing Channel 4's commercial focus in order to allow the company to become more fully self-sufficient. As a result, the company began to develop a more mainstream approach to its broadcasts. Part of this process included acquiring the rights to popular U.S. shows. In this way, Channel 4 premiered such series as Friends and ER for the British market.
The company's reliance on ITV for its advertising sales and its funding presented a major restriction for Channel 4's growth. The radical reorganization of the British television sector, launched with the Broadcasting Act of 1990, began a new era of self-sufficiency for the company. The new legislation dismantled the IBA, which was replaced by the Independent Television Commission (ITC, later itself replaced by Ofcom), opening the way for a whole new range of broadcasters to enter the U.K. market. At the same time, Channel 4 became a fully independent entity, changing its name to Channel Four Corporation.
Channel 4 became responsible for its own advertising sales. The move toward full independence began in 1992. As Andy Barnes, the company's first sales director, explained to Campaign: "When I arrived at Channel 4 there was no sales department, no desks, no lights. We had a year to prepare for selling our own airtime. Channel 4 felt, quite rightly, that it was being undersold and could make more money in the open marketplace. ITV only sold it to a level of 14 percent of its own channel. The worst percentage we've since got was an 18.5 percent share in 1993. It is currently 20.4 percent and this in an environment with many more competitors."
Channel 4's sales force came into service in January 1993. The effort was a quick success, and by 1996 the company booked record profits of £134 million. Yet the company remained hampered by a commitment to return a proportion of its profits to ITV; in that year, the payment topped £87 million. These payments were finally phased out in 1998.
No Longer a "Minority Channel" from 1998
The arrival of Michael Jackson as head of Channel 4 heralded a new era for the broadcaster. Jackson turned the company more firmly toward the mainstream market, declaring that Channel 4 was no longer a "minority channel." The company also faced into the rising competition presented by the growing numbers of satellite and digital broadcasters. As part of this effort, the company launched its own digital stations. The first of these, Film4, took over from the popular Films on Four series, and began broadcasting on a pay-per-view basis in 1998. The company's next digital station, E4, launched in 2001. The new station was also made available on a subscriber basis. Both stations were placed under a new subsidiary, 4 Ventures Limited, created in 2000.
Yet these efforts came at a cost to the company, which slumped into losses at the beginning of the new decade. By the end of the 2001 year, the company's losses topped £28 million. Jackson left the company that year, replaced by Mark Thompson, formerly an executive with the BBC. Thompson launched a widespread cost-cutting effort, including the shedding of 200 jobs. Also under the ax was Channel 4's film production division. That division had been unable to extend its string of successful hit films, including Four Weddings and a Funeral and The Crying Game, into the new century.
Thompson soon succeeded in returning Channel 4 to profitability. Under his direction, the channel also successfully fought off the challenge for market share from its younger rival, Channel 5. A reshuffling of the channel's programming proved a key point in the channel's new success, including acquiring the rights to such hit American series as Sex and the City and The Simpsons. Yet one of the most important factors behind the company's resurgence was its broadcasts of the hugely successful Big Brother reality television program. Big Brother became a major franchise for the company, with new seasons continuing to appear through the first decade of the 2000s, as well as a number of spinoff series, including Celebrity Big Brother. The success with reality television led Channel 4 to launch other reality-based series, including Wife Swap.
By the middle of the first decade of the 2000s, Channel 4 had shed its longtime image as the smallest of the public broadcasters. The company faced criticism, however, for its reliance on such "populist" programming, with some observers opining that the company no longer served its purpose by offering a true difference in its broadcasts. Part of the answer to this came with the passage of the Communications Act of 2003. Under this new legislation, the company was granted more freedom in its programming choices.
Converting to the Digital Era
Mark Thompson left Channel 4 in 2004 to take up the top job at the BBC, having restored the company to profitability and boosting revenues past £700 million. Controversy surrounded his replacement, Andy Duncan, whose previous career as a head marketer for Unilever earned him the nickname the "margarine man." Yet, as Marketing reported: "Duncan's two years in charge of Channel 4 have seen more launches and initiatives than any of the preceding 21 since its launch."
Among the major moves made by Duncan was the transformation of its digital channels into the advertising-supported free-to-air format. The company also rolled out a new channel, More4, as well as the FourDocs broadband-based simulcast service, and web-based video-on-demand services. In 2007, the company then teamed up with the EMAP media group to begin preparing the launch of its own music channel.
Duncan also led Channel 4 into radio broadcasting. In 2005, the company acquired majority control of Oneword, a talk-based digital radio station. The company also led the formation of the 4 Digital Group, a consortium including EMAP and UTV, among others, which successfully bid for one of two national digital radio licenses. The consortium began preparations to launch ten digital radio stations, including Channel 4 Radio and E4 Radio, among others. By 2006, the consortium had already made available the podcast-based 4radio service. Full rollout of the digital radio operations was expected for 2008.
Nonetheless, Channel 4's future remained clouded by the coming switchover to digital broadcasting. Channel 4's analog-based transmissions had long played a key role in its ability to compete against the onslaught of rival broadcasters. The company appealed to Ofcom to provide the company with funding similar to that given to the BBC. As Chairman Luke Johnson threatened in the company's 2006 annual report: "In coming years we shall be forced to steadily reduce our output of public service broadcasting, and focus more and more of our schedule on strictly commercial shows, unless we receive help in kind." Channel 4's status as a state-owned, commercially driven broadcaster nonetheless made it unique in the British television landscape.
Principal Subsidiaries
4 Ventures Ltd.; Channel Four International Ltd.; FilmFour Ltd.; Oneword Radio Ltd.
Principal Competitors
British Sky Broadcasting Group PLC; British Broadcasting Corp.; Reuters Group P.L.C.; Virgin Media Ltd.; ITV PLC; Channel Four Television Corp.; United Business Media PLC; London Weekend Television Ltd.; ITV Meridian Ltd.; Channel 5 Broadcasting Ltd.
Further Reading
Beale, Claire, "Michael Jackson Channel 4's Champion," Campaign, May 1, 1998, p. 30.
Carter, Ben, and John Cheves, "Expanding the Family," New Media Age, June 12, 2003, p. 20.
"Channel 4 Cashes In on Youth Market with £70m Profit," Sunday Business, May 15, 2005.
Darby, Ian, "Is Channel 4 Showing Its Age?" Campaign, November 8, 2002, p. 22.
Hargrave, Sean, "Strategic Play--Channel 5: Upwardly Mobile," New Media Age, March 17, 2005, p. 20.
Hodgson, Jessica, "UK's Channel 4 Television Goes Back to Its Roots," Sunday Business, January 11, 2005.
"Lifeline--Channel 4," Campaign, November 12, 2004, p. 11.
Mistry, Tina, "Channel 4's Quiet Man Faces a Battle for Change," Campaign, May 27, 1994, p. 16.
"Taking C4 into the Future--Andy Duncan, Chief Executive, Channel 4," Marketing, July 26, 2006, p. 20.
Wilkinson, Amanda, "Down to Business at C4," Marketing Week, July 8, 2004, p. 26.
— M. L. Cohen
