U.K. broadcaster Channel 4, led by CEO Alex Mahon, reported a record full-year 2023 loss of £52 million ($68 million) amid what it called a sharp and “prolonged” advertising downturn that saw U.K. ad revenue fall 9 percent, partially due to a correction after the post-COVID boom, as well as a “strategic decision” to keep spending on its digital transformation and continued investment in original content. But in its annual report and a press conference related to it, the public service broadcaster predicted a narrowed deficit for 2024 and a return to breakeven “over the mid-term,” while also touting signs of success in its digital push.
During the press event on Tuesday, Mahon noted that “it’s a record [deficit] but I would remind you of the years of record surpluses.” Indeed, after a 2019 loss, Channel 4 reported a 2020 surplus of £74 million pounds, followed by a £101 million surplus in 2021, and a slight £3 million surplus in 2022.
The CEO on Tuesday also touted digital gains, highlighting that Channel 4 last year managed to grow its overall viewing minutes slightly, by 1 percent, as growth in digital outpaced linear declines, making it “the only major U.K. commercial broadcaster to do so.”
2023 revenues topped £1.0 billion ($1.3 billion) for the third consecutive year, “representing a resilient
performance in a year of significant advertising downturn,” Channel 4 said. Mahon touted a digital revenue increase of 10 percent to £280 million ($367 million), accounting for 27 percent of total revenue, which the CEO said was “far ahead of the market.”
A chart showed by Channel 4 management on Tuesday highlighted “accelerating digital success in 2024,” with streaming viewing minutes set to rise 15 percent from 55.9 billion in 2023 to 64.2 billion, streaming views to climb 6 percent from 1.6 billion to 1.7 billion, Channel 4 viewing from streaming to increase from 15 percent to 18 percent, and digital advertising revenue to rise from 27 percent in 2023 to 30 percent in 2024, a year ahead of its original target. The broadcaster’s goal is to reach 50 percent in 2030.
COO Jonathan Allan said that the current levels are already “significantly higher” than what a chart listed as a 10 percent digital ad revenue average at U.K. and international commercial broadcasters. With non-advertising revenue representing 10 percent of total revenue, he also highlighted that 37 percent of Channel 4’s total revenue was now from sources other than linear advertising, up from 33 percent in 2022.
Channel 4’s total investment in content amounted to £663 million ($868 million), or 65 percent of revenue, which Allan said is “higher than key commercial competitors.” The total spending figure included £520 million ($681 million) for original content, the company’s second-highest figure ever.
“This year we’ve seen a more stable advertising market than last year,” CFO Lucy Thomas told reporters at the same event. “However, factors including high interest rates, cost of living and low business confidence also continue to affect the TV market. The story so far is of a brighter first half followed by a more challenging second half, … with uncertainty around the impact of the autumn budget statement [expected soon] affecting consumer confidence. So forecasts this year are rightly cautious. Industry predictions suggest the full year will be marginally up.”
Channel 4 expects total revenue in 2024 to be “broadly in line with last year despite the challenging market, digital ad revenues are expected to achieve double-digit growth again this year, offsetting the decline in linear.” Adding in continued investment in digital transformation and maintaining investment in British content, “there will be a deficit in 2024, albeit smaller than the deficit in 2023,” the CFO concluded.
Early this 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.”
Channel 4 CEO Alex Mahon
Courtesy of Channel 4
Asked if there will be more job cuts, Mahon said the broadcaster has moved through “the vast majority of redundancies” announced early this year but will keep an eye on possible cost cuts amid linear decline.
“In 2024, we have set out the next phase of Channel 4’s growth with a robust and ambitious
strategy for the future and have seen a stabilization of the advertising market,” said Mahon. “We are also at the point where digital viewing overtakes linear across the market,” she added, noting forecasts for digital viewing in the U.K. to hit 52 percent this year. “By committing even further to our digital transformation with our Fast Forward strategy, we are keeping Channel 4 ahead of the curve and protecting its ability to continue delivering trusted and distinctive content to the British public,” she concluded.
The Channel 4 team mentioned further details of its push into digital. “Digital advertising shows no signs of slowing down, and if anything, what we see is advertisers really value what we would call broadcaster video on demand because it’s high-quality, it’s verifiable, and it’s next to very good content,” Mahon shared. “So we see demand for that increasing. … There’s also no sign of viewers rejecting advertising. People still like free. Digital natives are used to it, so younger people are completely into it and don’t reject it. You see that on TikTok, you see it on YouTube.”
Overall, she described a switch to becoming a digital-first broadcaster and diversifying the business beyond traditional revenue sources as the key dual transformations for her team, with Channel 4 being further ahead on the digital change.
“We do need to make sure that we’re distributing in all the ways that young people want to view content, and that’s why YouTube is really interesting to us because that is additional reach,” Mahon also highlighted. “We’re getting viewers who are not coming to broadcaster platforms.”
As “a huge part of young people’s video day is spent watching social and short form” these days, “we’ve made social such a priority,” she also emphasized. “In 2023, Channel 4 was the largest [U.K.] commercial broadcaster on social, and in 2024 we have built on that with more than 200 hours of Channel 4 shows released on YouTube every month.”
Channel 4 chief content officer Ian Katz added that “we’re the only U.K. broadcaster routinely making full episodes of our content available on the platform soon after [their premiere], and we’ve seen a 300 percent viewing increase to these shows so far this year.” The overall growth in YouTube views for Channel 4 this year would hit 50 percent, he said, concluding: “We are leading the way on social.”
The former Conservative Party-led government of Boris Johnson looked at a possible privatization of Channel 4 a few years ago but then dropped that idea amid much industry opposition. Asked by a reporter if Channel 4 would maybe be open for a joint venture or other partnership suggested by the government, now led by the Labour Party, to give the broadcaster more scale and resources, the CEO shut down such ideas. “We’re not looking for government to do anything,” Mahon said. “We are not looking for government to assist us.” And she emphasized: “Being independent is what we think gives us the most beneficial advantages” to do what’s needed to transform the business.