Yahoo Movies UK’s Channel 4 To Slash Content Budget By $185M As It Is Ravaged By Coronavirus Pandemic
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British commercial broadcaster Channel 4 has outlined an emergency cost-cutting plan in its bid to weather the unprecedented coronavirus pandemic.
In an all-staff conference call on Wednesday afternoon, Channel 4 CEO Alex Mahon outlined measures to slash the broadcaster’s 2020 content budget by £150M ($185M) and find £95M of operational savings, including reviewing investments and cutting marketing spend.
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Channel 4 added that it will furlough around 10% of staff (around 100 people) across all areas of the business, and draw down on its £75M emergency credit facility for the first time since it was set up in 2018. As reported earlier this week, senior managers and board members will also have their pay reduced by 20%, while a recruitment freeze has also been put in place.
The mission to cut costs comes against the backdrop of a huge downturn in the advertising market, from which Channel 4 makes 95% of its revenue. Channel 4 said ad spend is down more than 50% in April and May, which was more severe than an estimate of 40% from revered UK research firm Enders Analysis this week. It has left Channel 4 brutally exposed, particularly given that the company has spent more than £50M of its £180M in cash reserves on relocating out of London.
Mahon said: “As a commercially funded business the COVID-19 outbreak has had a severe impact on our advertising revenues and so we are taking action now to manage our costs appropriately and ensure that we both protect our staff and our ongoing ability to serve our audience.
“We know that these are exceptionally challenging times for everyone in the UK, particularly many of the producers, talent and freelancers we work with across the television and creative industries and we are committed to safeguarding our long-term ability to invest in distinctive and challenging content and create jobs and opportunities in the sector across the UK.”
On the content cuts specifically, director of programs Ian Katz said some shows will have to canceled across its portfolio of channels. He was not specific about which shows will be axed, but it will be a mixture of established programs and shows that were commissioned prior to the coronavirus crisis. It is understood that Channel 4 is holding talks with a number of producers about finding savings on long-running shows.
The broadcaster said that its commissioning tempo will slow down over the coming weeks and months to reflect the budget cuts, but it has committed to spending £10M on coronavirus shows and will ring-fence £3M of development funding across 2020. In both cases, half the money will be spent with small, nations and regions or diverse production companies.
Katz said: “The coronavirus crisis has hit all commercial broadcasters with a double whammy of lost production and dramatically reduced revenues but it also poses a profound creative challenge which our indie partners have risen to with remarkable ingenuity, speed and resourcefulness.
“Over the next couple of weeks our commissioners will be discussing with production partners what types of content will best serve audiences as we emerge from the crisis and into next year and we will be offering more detailed briefs on what we are looking for in 2021 later this month.”
Ironically, given the extreme pressure on Channel 4’s finances, the broadcaster is in fine-health on screen as the lockdown in the UK has sent TV ratings soaring. Shows including Friday Night Dinner and The Great Celebrity Bake Off have scored their best-ever audiences, while streamer All 4 is enjoying record engagement.
Channel 4’s savings plan follows ITV also reducing its programming budget by £100M and cutting executive pay by 20%. ITV CEO Carolyn McCall told investors last month that the company is operating in “unprecedented and uncertain times.”
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