U.K. broadcaster Channel 4, led by CEO Alex Mahon, who recently said she would step down this summer after eight years, will move into in-house production in a sea change and will also start looking to buy production companies with “strong commercial potential” in an evolution of its acquisition strategy.
Over the course of its 40-year history, the broadcaster has concentrated on greenlighting its content from independent production companies, but the U.K.’s Media Act 2024 removes a restriction that now opens the door for Channel 4 to create its own content in-house.
The news came as Channel 4 reported a full-year 2024 deficit before exceptional items of £2 million ($2.7 million), or £12 million ($16.1 million) when including restructuring costs, an improvement over a year-ago record loss of £52 million due to a “prolonged” advertising downturn.
During a Wednesday press event, Mahon, chief content officer Ian Katz, COO Jonathan Allan, CFO Lucy Thomas, and interim chair Dawn Airey discussed the new production strategy and state of the business.
Channel 4 said it would follow a new “twin-track approach” to investing in intellectual property (IP) ownership, “incorporating a phased move into in-house production and the launch of a new Creative
Investment Fund” focused on buying or building majority stakes in independent production banners and “content producers with strong commercial potential.”
The strategy is an evolution from Channel 4’s current Indie Growth Fund, which has been investing in start-up indies, such as Yeti, Five Mile Films and Warp, since 2014. Now, instead of being an early-stage strategic partner for growth to the next level, the broadcaster will “look to take larger equity stakes in scalable companies, with a clear path to 100 percent ownership.”
The broadcaster didn’t detail the size of the new investment fund, with executives only emphasizing that Channel 4 is much smaller than the likes of ITV Studios or BBC Studios and there will be “no seismic change” immediately.
Channel 4 also committed to an increased quota for indie productions from 25 percent to 35 percent.
“In an increasingly competitive world, this diversification of revenues is an essential step in supporting Channel 4’s role as a sustainable champion for independent production and will enable longer-term content investment with indies of all shapes and sizes and in every part of the U.K.,” Channel 4 said.
Its strategy of developing in-house production capabilities is designed “to create returnable, scalable formats focused [on] factual entertainment, reality and entertainment genres with international potential, allowing Channel 4 to benefit from global income streams to drive its investment into U.K. production.”
Channel 4’s in-house production operation will be established as a separate entity “with clear operational separation, reporting lines and management distinct from Channel 4 commissioning, processes to ensure fair competition for commissions, and will be accompanied by a new dedicated complaints process for producers,” it said, adding that it will be “able to pitch to Channel 4 and other media platforms.” In-house production is expected to start in 2026.
Channel 4 is looking for an experienced creative lead to launch the new division, reporting to Allan. The exec “will be responsible for marrying creative success with commercial growth, developing and nurturing new formats to travel globally, while building a successful catalogue of IP,” it said.
“It’s indeed a huge change in our potential business model, and one that we believe is essential for the long-term sustainability of Channel 4,” Allan told the press on Wednesday. “This move is going to be very carefully managed, and its initial scale will not disrupt the market, nor would it change how we commission,” he also vowed. Pointing out that Channel 4 is not focused on a for-profit model and its high content spend ratio, he concluded: “A stronger, more secure Channel 4 means a stronger production sector.”
Channel 4’s 2024 revenue climbed 1 percent to top £1.0 billion ($1.34 billion) for the fourth consecutive year. Channel 4’s total investment in content amounted to £643 million ($865 million), or 62 percent of revenue, compared with 65 percent in 2023. The broadcaster highlighted that this is “a higher proportion
than competitors.”
2024 was “another volatile year for the U.K. economy and the advertising market, shaped by global uncertainty, persistent inflation and high interest rates,” and the macroeconomic outlook remains “uncertain,” Thomas noted during Wednesday’s press conference. She noted that “tough but necessary choices to manage costs, including streamlining our operations,” and a disciplined approach allowed the broadcaster to still deliver “a robust financial and operational performance,” also expressing confidence in its future outlook.
A chart shown by Channel 4 management on Wednesday highlighted what the broadcaster previously touted as “accelerating digital success.” Streaming viewing minutes came to 63.4 billion in the latest year, compared with 55.9 billion in 2023. Streaming views jumped 13 percent from 1.6 billion to 1.8 billion, above the previously forecast 1.7 billion.
Channel 4 viewing from streaming increased from 15 percent to 18 percent, and digital advertising revenue jumped from 27 percent in 2023 to 30 percent in 2024. The U.K. broadcaster on Wednesday reiterated its goal of reaching 50 percent in 2030.
Last year, Channel 4 unveiled a five-year strategy entitled “Fast Forward” to reshape itself and “accelerate its transformation into an agile, genuinely digital-first public service streamer by 2030.” Proposing to reduce headcount by 18 percent — including around 200 layoffs and the closure of approximately 40 unfilled roles, it said in late January that “around 70 percent of roles closed would be out of legacy operations.” It added: “This would return headcount close to 2021 levels, but with the organization in the right shape to deliver further digital growth and lead public service media into the future.”
Allan touted on Wednesday: “We’ve made great strides in reshaping Channel 4 into a future-facing public service streamer. Our streaming growth and digital innovation are outpacing the market, with disciplined financial management and bold content investment.”
Mahon, who will leave the broadcaster in July, with Allan stepping into the role on an interim basis, said on Wednesday: “In 2024, Channel 4 showed how powerfully our public service model can evolve and thrive in a changing world. Fast Forward is delivering – creatively, digitally, and commercially.”
She concluded: “Channel 4’s purpose has never been more vital, and I leave confident that the organization will continue to disrupt, challenge and drive the national conversation for years to come.”
During a press conference, Mahon also emphasized: “The future of public service media is under pressure from the global players.”
Asked about U.S. President Donald Trump’s threat of tariffs on foreign movies, she said: “Tariffs are a worry for the film industry. We have the biggest funding of British film in terms of Film4 … So we don’t want the tariffs … to disrupt production. But obviously the film industry is in a kind of wait-and-see moment.”
Katz, at Wednesday’s press event, touted such Film4 movies of 2024 as Poor Things, The Zone of Interest, Earth Mama, and How to Have Sex. And he shared that the company was “thrilled about our upcoming slate,” such as Oliver Hermanus’ The History of Sound, starring Paul Mescal and Josh O’Connor, which debuts at the Cannes Film Festival on Wednesday evening.
In terms of drama, Katz argued that “our contribution to British creativity is stronger than ever,” touting such upcoming dramas as Russell T Davies’ Tip Toe, Daisy Haggard’s Maya, and Jack Thorne’s Falling. He shared that overall, the coming programming is “what I think is the strongest drama slate in Channel 4’s history.”
