Channel 4 plans to cut its content budget by a whopping £245m; while its Board of Directors take a tiny 20% pay cut and bonus ’suspension’.
We’re big fans of C4, but! Given the severity of the situation, Mediashotz estimates a 50% pay cut and cancelled bonuses would have been more appropriate. Dare we even add furloughed?
Content making budget slashed
The cuts are being made to ensure it can navigate the economic impact of the Covid-19 outbreak; which has had an unprecedented impact on advertising revenues in the UK.
C4 is publicly owned and run as a non-profit organisation which invests its available income into commissioning content. However, it is entirely commercially funded, the vast majority of which is from television and digital advertising.
The broadcaster said it has prudently managed its finances over successive years. It claimed to be well equipped to navigate normal cyclical pressures on the advertising market, the broadcaster said.
But the impact of this crisis on the UK and globally has had a severe effect on demand for advertising. The TV ad market set to be down in excess of 50% over April and May, and limited future visibility.
The channel has outlined a number of financial measures which it said will enable it to navigate through the crisis. The measures should also protect its ongoing ability to serve its audience and invest in the UK creative industries.
The budget cuts:
- All executive and non-executive Board members have taken an immediate voluntary 20% pay cut. At the request of the executive Board members the remuneration committee has decided to suspend the 2020 bonus scheme for executive directors.
- We expect to reduce the 2020 content budget by £150m. This reflects both the difficulties of producing programmes and films in the current environment, as well as some extremely difficult decisions to delay or cancel some content across Channel 4, E4 and More 4 across the year. Channel 4 will maintain its support for the creative sector – continuing to commission and develop content for 2020 and 2021 – with ringfenced funding for small. Nations & regions and BAME-led independent producers (further details below).
- A further £95m of savings will be achieved across the organisation through a full review of planned projects and investments, including a reduction in marketing budgets.
- In order to provide additional liquidity and working capital through this unprecedented economic period we have drawn down on the commercial £75m revolving credit facility (RCF) that has been in place since 2018.
- We remain focused on safeguarding the jobs and protecting the livelihoods of Channel 4 staff but have undertaken a comprehensive review of our people costs, which will include a full recruitment freeze for all but business critical roles and a review of all third-party costs.
- Additionally, we will participate in the government’s Coronavirus Job Retention Scheme and today we will be opening discussions on furloughing with around 10% of Channel 4 staff, whose roles are impacted by the current circumstances.
All of these measures will be reviewed regularly given the limited market visibility currently.
“Over the last few weeks Channel 4 has demonstrated the importance of its role as we have helped navigate our audience, particularly young and hard to reach viewers, through these challenging times – with record viewing figures for Channel 4 News including over 200 million views to our news content on social media, and our ‘Stay at Home’ on-screen graphic reaching almost two thirds of the UK population”, Alex Mahon, Channel 4’s CEO said.
“However, as a commercially funded business the Covid-19 outbreak has had a severe impact on our advertising revenues; 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. 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.”