C4 2017 results provide foundation for commercial & creative strategy

5 June 2018

Channel 4 Chief Executive Alex Mahon

 

• Despite 2017 ad recession, corporation revenues of £960m (2016: £995m)
• British original content investment of £510m (2016: £501m)
• Growth in digital revenues to £124m (2016: £102m)
• Growth in investment in N&R production to £189m (2016: £169m)
• Strong foundation for delivery of new strategy focused on accelerating digital, supercharging impact with young, and a creative and inclusive culture

Channel 4 delivered a strong set of commercial and creative results in 2017 – providing a sound foundation for the new commercial and creative strategy outlined by new Chief Executive Alex Mahon in May 2018.

Despite an advertising recession, Channel 4 delivered corporation revenues of £960m – above the five year revenue average for the corporation – with continued growth in digital revenues to £124m.

£675m was invested in content, with a record £510m spent on original British produced programmes – up from £501m in 2015. £189m was spent on content produced in the Nations and Regions, with 309 producers across the UK – up from £169m in 2015.

A financial deficit of £17m was less than the planned outcome for the year, and reflects the established investment cycle of using surpluses accumulated in previous years to maintain investment in remit delivery through a more challenging economic environment.

At the end of 2017, Channel 4 retained a very strong balance sheet of £446m, including cash reserves of £190m, which will provide a solid platform for future growth and continued commercial self-sufficiency.

Creative highlights for the year included the hugely successful launch of The Great British Bake Off on Channel 4, as well as new youth-focused returning drama, Ackley Bridge, and the critically acclaimed The State and The Handmaid’s Tale – with other successful programming including Educating Greater Manchester, First Dates, Old People’s Home for 4 Year Olds and Lego Masters.   Channel 4 also continued to showcase diversity in sport with live coverage of both the Women’s Euro 2017 Championships and the London 2017 World Para Athletics Championship – in addition to its live coverage of Formula One.

Channel 4 maintained its share of viewing across the portfolio, at 10.5%, and on the main channel at 5.9% (incl 4Seven). There was also continued growth in on-demand viewing, with 719m programme views on All 4 over 2017, up from 620m in 2016.

Film 4’s investment strategy, which was expanded in 2016 to take larger financial stakes in films, continued. This strategy produced the Oscar winning Three Billboards Outside Ebbing, Missouri, which was co-financed on an equal basis with Fox Searchlight and released in the UK at the start of 2018. Other Film4 backed film highlights in 2017 included Rungano Nyoni’s I Am Not A Witch, Danny Boyle’s T2 Trainspotting, Yorgos Lanthimos’s The Killing of a Sacred Deer and Ben Wheatley’s Free Fire.

Channel 4 Chair, Charles Gurassa said: “Our 2017 annual results are set against one of the most difficult economic backdrops for several years and I’m particularly pleased that, despite those challenging circumstances, Channel 4 was able to perform at close to record levels – both in terms of its public remit delivery and its financial results.

“Our performance in 2017 also demonstrated how Channel 4 is able to adapt to a challenging marketplace and to changing viewing habits. The results provide a good foundation for the new corporate and creative strategies announced last month and for the continued creative and commercial success of the corporation.”

Channel 4 Chief Executive Alex Mahon said: “My first six months at 4 have made it utterly clear to me what a rare and vital creative force Channel 4 is. We connect with a young and upmarket audience, we are a scale play for advertisers, and we have a distinctive and resonant brand. All of this means we can accelerate our commercial innovation, be the creative partner of choice for brilliant producers and film makers, and be both different and popular.”

In May 2018, Alex Mahon outlined her strategy for Channel 4 in a speech to the television production industry. This was built around three key themes: Supercharging Channel 4’s impact with young people; accelerating digital capabilities; and building a creative and inclusive culture.

As part of this, Channel 4 announced that it would be boosting investment in E4 and comedy commissioning and also substantially increasing investment in All 4, including appointing a new Chief Product Officer reporting to the CEO.   It also included a substantial commitment to increasing on and off screen talent development and creating jobs in growth areas such as digital and technology – including the launch of a new creative business to create digital content growth beyond Channel 4’s own platform.

Channel 4 will also scale-up its successful Commercial Growth Fund, which takes equity stakes in growing consumer businesses in return for advertising airtime. The fund, which generated £4m of return in 2017 will be focused on investing in high potential digital businesses.

A core part of the overall strategy is the 4 All the UK plan, which was launched earlier this year. At the heart of the strategy is a major commitment from Channel 4 to significantly increase its Nations & Regions content spend from its current quota of 35% to a new voluntary target of 50% by 2023. This will result in a cumulative boost of over £250m in Channel 4’s Nations & Regions commissioning spend. It reflects both external analysis and feedback from the industry that increasing spend would have the greatest impact on regional economies and jobs.

To support and catalyse this spend across the UK, Channel 4 will move to a multi-site operating model, establishing a new National HQ and two new smaller creative hubs in the Nations & Regions in 2019 – home to jobs from across the business including key creative decision makers.

A shortlist of 13 cities and regions for the National HQ and Creative Hubs was announced on May 30th, and a second phase of engagement with those shortlisted will take place over the summer. The final locations will be announced by October 2018.

As a further part of this strategy, Channel 4 will refocus its successful Indie Growth Fund to primarily invest in Nations & Regions production companies, as well as BAME and digitally focused businesses.

 

Link to the online version of Channel 4’s 2017 Annual Report here.