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Channel 4 Annual Report 2022: Strong and resilient results, with solid building blocks for future growth in place

Category: News Release

2022 Performance Highlights:

  • All-time record £713 million invested in British content
  • Ended year with £1.14 billion revenues, topping £1 billion for second consecutive year
  • Digital revenues increased 14% YoY to £255 million, accounting for 22% of total revenues
  • Diversification of revenues: one-third of revenues not from linear advertising
  • Record £570 million spent on originated content
  • Two-thirds of all new programmes made in Nations & Regions, with record £228 million invested in new shows outside of London
  • 485 Channel 4 roles across Bristol, Glasgow, Leeds and Manchester
  • Strong streaming growth continued, achieving 1.4 billion total streaming views
  • Ofcom commends Channel 4’s 2022 strong performance and digital transition strategy progress

Sir Ian Cheshire, Chair of Channel 4, commented: “Last year as we emerged from the pandemic, Channel 4 faced unprecedented challenges: privatisation, political instability and macroeconomic turbulence continuing into this year. Channel 4’s exceptional team has steered the organisation to the benefit of British viewers and the creative industries. Channel 4 is focused on being more digital as a broadcaster and more commercial as a business, transforming into a public service streamer. With a uniquely strong brand, Channel 4 is very well-positioned. However, we need Government’s help to address prominence, so young audiences can continue to find safe and trusted British video that reflects their lives. There is no time to lose.”

Alex Mahon, CEO of Channel 4, said: “With Channel 4’s financial sustainability and ownership status no longer in question, we are doubling down on what we were created for: to deliver the best and broadest range of programmes that truly reflect British lives; to engage young people with genuinely public service content; and to prioritise digital growth to be where the audience is. As the industry sees through this cyclical advertising downturn, Channel 4 will be at the forefront, creatively more relevant, vibrant and distinctive than ever, especially for young audiences. We will continue to innovate, embrace change and adapt to the challenges of the future.”

Financial performance

In 2022 Channel 4 achieved total revenues of £1.14 billion, less than 2% below 2021’s record £1.16 billion. The second half of 2022 included a significantly more challenging consumer environment, which has continued into this year.

Channel 4 made significant strides in its Future4 strategy as the broadcaster focused on diversification of its revenue base. In 2022 digital advertising brought in £255 million, accounting for 22% of revenues, a 14% increase over 2021, and staying on track to reach Channel 4’s Future4 target of 30% of revenues coming from digital advertising by 2025.

By the close of 2022, fully one-third of Channel 4’s total revenues no longer came from linear advertising. Non-advertising revenues, including film and partnerships revenue, reached £121 million, 11% of Channel 4’s total revenues in 2022, fully three years ahead of its 10% target. Combined with 22% of revenues from digital advertising this means one-third of Channel 4’s income was not from linear advertising.

Channel 4 recorded a pre-tax surplus of £20 million before exceptional items including the one-off retention payment of £17 million linked to privatisation. This is the third year in a row the broadcaster has recorded a surplus, with Channel 4 increasing its net cash reserves to £253 million and group net assets to £560 million.

To ensure retained access to capital in the event of significant market shocks, Channel 4 also successfully renewed its ESG-linked £75 million Revolving Credit Facility for another five years.

Content investment

2022 was another strong year on screen with the broadcaster spending an all-time record of £713 million on content, including £570 million on originated content and working with 170 independent production companies.

2022 also set a new investment record for Channel 4’s spending in the Nations and Regions, with £228 million invested in content from production companies outside of London, and two-thirds of originated show hours coming from the Nations and Regions.

Over the course of 2022, Channel 4 achieved 91 programme awards – the highest level since 2014 – including Channel of the Year at Edinburgh and earlier this year picked up 13 TV and Craft BAFTAs, the broadcaster’s best performance in 22 years.

Channel 4 delivered multiple hits and popular programmes including the final series of Derry Girls, Big Boys, I Am Ruth, The Undeclared War, Somewhere Boy, The Jeremy Kyle Show: Death on Daytime, and My Dead Body, as well familiar returning hits such as Gogglebox and The Great British Bake Off.

Channel 4 celebrated its 40th Birthday with its Truth and Dare season including programmes such as Prince Andrew: The Musical and Friday Night Live.

The broadcaster offered excellent live sports coverage, including the winter Paralympic Games in Beijing, with its world-first all-disabled presenting team. It secured rights to England’s UEFA Nations League and European Qualifiers through to 2024, and screened nail-biting Formula 1 coverage and England’s triumph at the T20, bringing national sporting moments free to the nation.

The quality of Channel 4 News, now co-anchored in Leeds and London, was recognised with a BAFTA for its coverage of the Ukraine War. It grew its reach by 2% in 2022, and its audience share among 16-24-year-olds by 34%.

Film4 enjoyed a successful year, with four-time BAFTA-winning The Banshees of Inisherin and acclaimed films such as Living, Brian and Charles, and The Son. This year, Film4 has already won two major prizes at Cannes with Molly Manning Walker’s debut How to Have Sex and Jonathan Glazer’s The Zone of Interest winning the Grand Prix.  

Building a public service streamer: excelling with young people

In 2022 Channel 4 achieved 1.4 billion total streaming views, just shy of the record 1.5 billion views achieved during lockdown in 2021. For context, 2021 had the advantage of increased home viewership due to people being required to stay at home in the first half of the year. In the second half of 2022, streaming views were 5% higher than the same period in 2021.

Channel 4 continued to be the youngest profiling Broadcaster Video on Demand (BVOD) service in the UK, with 16-34-year-olds making up one-third of its user base. To date, 85% of the UK’s 16-34-year-olds have a Channel 4 streaming account.

Since its launch in October 2022, Channel 4.0, a new digital brand aimed at young people, has generated more than 42 million views, with 75% from 13-24-year-olds.

UNTOLD, Channel 4’s digital-first current affairs strand for young people, performed well on both Channel 4 streaming and YouTube.

Channel 4 continued to grow its footprint as one of the largest social media brands for young people in the UK, with a series of strategic commercial partnerships with digital platforms including YouTube, Snapchat, and TikTok.

Ofcom commends Channel 4’s 2022 strong performance and its digital transition strategy progress

Channel 4 delivered high levels of public service remit and audience value:

“We recognise that C4C faced significant uncertainty during most of this reporting period ... Against this backdrop, the continued commitment to successful delivery of the remit and media content duties which we have highlighted in this report, and the broad range of diverse and innovative content that C4C has produced, have been testament to the effective leadership of C4C during this time.”

Channel 4 maintained its focus on key audiences, particularly young adults:

“We … commend C4C for the range of initiatives for older children and teenagers that were launched in 2022.”

Channel 4 continued to represent all the UK:

“C4C continues to positively represent cultural diversity by showing programming that reflects the broad range of viewpoints, cultures and communities in the UK.”

2023 outlook

Channel 4 entered 2023 with a robust balance sheet. However, with inflation more persistent than forecasted, compounding the cost-of-living crisis for the UK consumer, the TV advertising market is experiencing a tough cyclical downturn, which Channel 4 forecasts will be down around 6% for the year.

Despite this, Channel 4’s digital revenues are expected to grow by double digits to represent 25% of revenues in 2023, while BVOD is forecast to grow above most media in 2023 at circa 12%. Despite significantly tightening the reins for the second half of the year, Channel 4’s underlying cash investment in content remains on track to increase in 2023 over 2022, though playout of this will be phased across this year and 2024.

Channel 4 expects the ad market to improve into Q4 of this year, with the broadcaster forecasting full year revenues above £1 billion.

2024 is expected to be more stable as the economy improves with advertising demand buoyed by a US Presidential election, Paralympic and Olympic Games in Paris, the Euros Football and a forthcoming UK General election. Channel 4 remains on the hunt for brilliant creative ideas and new content opportunities.