C4 to cut $186m from content budget
Channel 4 is planning to reduce its content budget by £150m (US$186m) as part of measures to mitigate the impact of the Covid-19 crisis, which also include furloughing 90 employees.
The commercially funded UK public broadcaster has outlined a number of measures it will take as a result of the pandemic, which has had an unprecedented impact on advertising revenues in the UK.
The TV ad market is set to be down in excess of 50% over April and May, which will hit C4 hard, as the vast majority of its funding comes from television and digital advertising.
Accordingly, all executive and non-executive C4 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.
The content budget is expected to be reduced by £150m, which “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,” the broadcaster said.
C4 added that it would continue to commission and develop content for 2020 and 2021, with ring-fenced funding for small nations and regions and BAME-led independent producers.
A further £95m of savings have been targeted 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, C4 has drawn down on the commercial £75m revolving credit facility 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,” C4 said.
“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.
“All of these measures will be reviewed regularly given the limited market visibility currently,” C4 added. The furloughing is expected to affect around 90 staff members.
C4 CEO 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.
“However, as a commercially funded business, the Covid-19 outbreak has had a severe impact on our advertising revenues and so we are taking action now to manage our costs appropriately and ensure that we protect our staff and our ongoing ability to serve our audience.”
“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.”
Ian Katz, C4’s director of programmes, set out further details of his commissioning strategy in light of the reduction in overall content spend.
“We remain committed to responding creatively to the coronavirus crisis – and we will be spending over £10m on shows capturing the impact of the pandemic, helping viewers through lockdown and keeping them entertained,” Katz said. “At least 50% of this spend will be committed to small, nations and regions or BAME-led production companies.
“We recognise that this is a desperately challenging time for all our colleagues in the production sector, particularly smaller indies and freelancers, and we believe we can support them best by continuing to commission shows and developing brilliant new ones for next year, and we will be ring-fencing half of both our remaining 2020 origination and development spend for small, BAME and nations and regions firms.
“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.”