Channel 4, the British broadcaster behind global hits including The End Of The F***ing World, has said that it will end 2020 on a sure financial footing after it was ravaged by a 50% drop in advertising revenue at the height of the coronavirus pandemic.
The Great British Bake Off network provided an update on its 2020 performance as it published its annual report for last year. The company, which is wholly-owned by the UK government but commercially self-sufficient, said it would end 2020 with a “significant” surplus that it can reinvest in content.
This would have seemed unthinkable just a few short months ago, when Channel 4 was forced to slash its programming budget by £150M ($195M), cut other costs by £95M, and furlough 100 staff. This followed its ad sales being cut in half — an existential issue for a broadcaster that makes 95% of its revenue from advertising.
As well as posting a surplus (which compares with a deficit of £26M in 2019 as a result of its relocation from London to Leeds), Channel 4 said it will repay £1.5M to the government for the furlough cash it received this year. The broadcaster added that it will put £11M back into its programming budget in 2020 and plans to increase its spending “significantly” next year.
The ad market has rebounded and is now “at the better end of forecasts,” according to CEO Alex Mahon. Channel 4 added that the share of viewing across its portfolio of channels is up 2% during fall, while its streamer, All 4, has posted a 27% increase in viewing for the year to date. As a result of the turnaround, Channel 4 expects its ad revenue to be flat in August and to grow a record 12% in November. This graph shows Channel 4’s V-shaped ad sales recovery in 2020:
“Channel 4 is often at its best when it’s up against it,” Mahon said, adding that the whole organization was “galvanized” by the pandemic and is emerging from the crisis “stronger than we’ve ever been.” Mahon and director of programs, Ian Katz, also praised Channel 4’s production sector partners’ ingenuity in helping keep schedules filled after 800 hours of content was “displaced” by shoot shutdowns and postponed sporting events. They pointed to The Great British Bake Off being made in a bubble and returning with 10.8M viewers last month — Channel 4’s biggest audience since 1985.
In terms of 2019’s performance, here are some highlights from Channel 4’s annual report:
Channel 4’s revenue grew by £10M to £985M
Channel 4 spent £660M on content, down slightly on £662M in 2018
Digital revenue rose 18% to £163M and now represents 17% of Channel 4’s total sales
Channel 4’s percentage of BAME staff fell to its lowest level in five years (17%), but Mahon said it was an “outlier” year amid its move to Leeds
Drama spend fell by £1M to £79M in 2019, but Katz said it was still a “bumper” year in the genre with shows like Brexit: The Uncivil War
Mahon’s total pay rose 0.7% to £943,000, while Katz’s remuneration was up 4.3% to £528,000
Channel 4 chair Charles Gurassa said: “Channel 4 has come into its own in the pandemic, demonstrating an impressive ability to weather this unprecedented crisis and underlining the flexibility and resilience of its business model. It has reconfirmed our role as a distinctive, trustworthy, independent and authentic British voice.
“Set against the backdrop of a global pandemic, mega-global media and technology companies entering the UK market, fragmenting audiences and the ever-increasing risk of disinformation, this is perhaps more important than ever.”
Mahon added: “2020 has undoubtedly been an incredibly challenging year, but Channel 4 is showing that we will emerge from this crisis stronger than ever.”
Following the UK government indicating that it will review Channel 4’s future, with one eye on potentially selling the broadcaster, Mahon said she was “calm” about the debate. Media minister John Whittingdale said earlier this month that the pandemic and rise of streamers, such as Netflix, had exposed “strain” in Channel 4’s commercial model, which he said is not sustainable. Today, Mahon responded: “We’ve come through this in an incredibly positive way. We’ve clearly proved our financial sustainability and flexibility, but we’ve also proved how important we are to the audience.”
More from Deadline