Mark Sweney 

Channel 4 takes step towards getting into TV production

Publicly owned broadcaster spends about £4m to take undisclosed minority stakes of up to 25% in four companies
  
  

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David Abraham, chief executive at Channel 4, has described the deal as being a significant moment for the publicly-owned broadcaster. Photograph: Linda Nylind for the Guardian Photograph: Linda Nylind/Guardian

Channel 4 is getting into TV production in a significant way for the first time in its 32-year history, buying minority stakes in four independent producers, including those responsible for Oscar-winning documentary Man on Wire and MTV reality show The Valleys.

The publicly-owned broadcaster has spent about £4m to take undisclosed minority stakes of up to 25% in the companies, the first investments from a £20m fund that aims to help the growth of small and medium-sized independent producers.

Channel 4 is not allowed to be directly involved in making programmes under the terms of its broadcasting licence. However, there is nothing to stop it taking stakes in production companies, although this is the first time the broadcaster has made such investments.

Since launching in 1982, Channel 4 has made a virtue of operating as a publisher/broadcaster, relying on outside suppliers for its programmes rather than an in-house production operation, like the BBC and ITV.

However, this means that it owns relatively little of the intellectual property rights to the shows it commissions. Exploiting these rights by selling completed programmes and formats to foreign broadcasters, or licensing them for video-on-demand services, is a potentially lucrative business and Channel 4 is looking to develop alternative sources of revenue as its traditional TV advertising income faces long-term decline.

"This is a significant moment for Channel 4," said David Abraham, chief executive. "This is just the start and we will be announcing more deals over the course of the next year."

Channel 4 has invested in Lightbox, founded by Simon Chinn, the Academy Award-winning producer behind documentaries Searching for Sugar Man and Man on Wire; Arrow Media, a specialist in the factual programming field with credits including Channel 4's Dogs: Their Secret Lives and BBC2's Jumbo: the Plane that changed the world.

The other companies it has taken a minority stake in are Popkorn, maker of shows including Sky1's Football behind Bars, Channel 4's Living with my Stalker and Channel 5's My Violent Child; and True North, which makes MTV's Welsh reality show The Valleys and the BBC's Animal SOS.

Channel 4 said that the deals come with no strings attached in terms of "first look" deals on shows or distribution rights, or the the production companies getting preferential treatment from the broadcaster's commissioning team.

The broadcaster said that each investment was carefully considered to evaluate whether there was a "clear growth opportunity".

It added that as a not-for-profit, state owned enterprise with a public service remit, commercial returns from the companies will be used for purposes including boosting the £429m spent annually on homegrown shows. Channel 4 spends about £600m in total annually on original commissions and acquired programming.

Buying minority stakes in independent producers is a strategy that BBC Worldwide, the commercial arm of the BBC, has previously pursued.

BBC Worldwide invested in a string of companies including Big Talk, maker of shows including Rev; Left Bank, the producer behind the BBC's Wallander remake and Sky's Mad Dogs and Strike Back; and Baby Cow, co-founded by Steve Coogan. It has now sold nearly all these stakes at a profit, to broadcasters including ITV and Sony.

 

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