Channel 4 is to seek majority stakes in independent TV production companies as it seeks to boost and diversity its revenue streams.
Until recently the publicly owned broadcaster, which is self-funding through advertising and other commercial revenue, was barred from producing content in-house.
However changes in last year’s Media Act removed this restriction, paving the way for it to own formats, Intellectual Property (IP) and production capability.
The changes were introduced to help Channel 4 better withstand the competition from international rivals while also enabling it to compete for commissions and format sales with the BBC and ITV, both of which have extensive global production businesses.
Under its new strategy Channel 4 will build majority stakes in indies while gradually developing “focused” in-house production capabilities in factual entertainment, reality and entertainment genres with international potential.
At the same time it will ensure independent producers still play a significant role by increasing the quota of content they supply and ensuring that its in-house production team is operationally separate from its commissioning teams.
To achieve this, the new production arm will be established as a separate company with its own management and reporting lines and will pitch both to Channel 4 and external broadcasters and streamers.
The company has previously held minority stakes in a number of fledgling production companies but will in future look to take larger equity stakes in scalable companies, with a “clear path” to 100% ownership.
Announcing the new strategy, outgoing CEO Alex Mahon and COO and incoming Interim CEO Jonathan Allan said: “The plans we are announcing today are the centrepiece of our strategy to diversify revenues and secure Channel 4’s long-term sustainability.
“The creation of in-house production and our investment in indie stakes will allow us to generate new income streams that are not wholly reliant on the advertising market.
“Indies will always be the lifeblood of Channel 4, and this new direction is an essential element of our strategy to underpin the long-term sustainability of Channel 4 for the benefit of the independent sector and British storytelling – where all roads lead back to investing in UK independent production.”