Thank you Jon, and given I have the dreaded after-lunch spot – I thought I would kick off with a bit of a reminder of why we all love Channel 4.
It’s great to be here today at a particularly interesting time for Channel 4 and at an incredibly exciting time for the British screen sector.
DCMS estimates that the creative industries are worth just over a hundred billion pounds to the UK economy.
More than the automotive, aerospace, life sciences, and oil and gas industries – combined.
And that’s just the economic value. The sector also provides a substantial cultural contribution to the UK’s brand abroad
For example – plug alert – Channel 4 has won 37 Oscars and 84 BAFTAs in its 40 years, exporting British talent around the world and boosting the UK’s soft power.
The UK is undoubtably one of the best places in the world to produce content.
Spending on high-end TV has doubled since 2016, and we’re on track to become bigger than Hollywood for studio space, in just two years’ time.
And there is a real buzz around the cinema once again and it’s good to know Tom Cruise has still got it - Top Gun has already passed one billion dollars at global box office.
But beyond those fast jets and aviators, we are all facing a number of tough headwinds on the horizon.
And today I want to talk about three areas where our sector must rise to the challenge – and why Channel 4 is uniquely placed to help lead the way.
First, technology, globalisation and viewer preferences have catapulted our industry to a place that would have been unimaginable when Channel 4 was created forty years ago.
The sheer volume of unbelievably high-quality content at our fingertips and the corresponding behavioural change in viewing habits has been dramatic and fundamental – questioning all our business models and requiring positive action.
Second, it’s getting a lot more difficult to secure the best talent.
Just last week ScreenSkills reported that the UK film and TV sector will need an extra twenty one thousand full time crew over the next three years. This means all of us have to raise our game to attract – and more importantly train – the next generation of the right talent.
Third, the UK economy is facing an unprecedented set of short -term challenges.
Still recovering from the pandemic, we’re faced with inflation at a forty year high, a cost-of-living crisis, and supply constraints worsened by the war in Ukraine – which means the outlook is far from certain and a recession increasingly likely.
So, we all have a challenging operating environment for the period ahead of us – and it’s my role at Channel 4 to ensure that we remain resilient in the face of these headwinds – not just for the success of the organisation, but for the continued positive impact of our remit for distinctiveness, diversity and innovation.
Our continued success is also vital for the creative ecosystem that we are at the heart of. It is our duty to innovate at pace so that we can continue to support the thousands of jobs and hundreds of small businesses that depend on us.
I’m going to talk briefly about the three challenges I outlined, and how Channel 4 is tackling these head on.
Let me talk first about the changing environment, both in the screen industry, and in people’s homes.
Intense competition for eyeballs is reshaping the sector – and driving fragmentation of viewing and attention. All viewers, understandably want to be able to access content how and where they want to.
Of course, linear TV remains hugely popular and will remain robust for many years to come, but we can’t ignore the fact that changing habits pose a particular challenge and linear viewing has consistently fallen over the last decade, particularly for younger viewers.
This is driven by continued uptake of smart devices and SVoD services – both of which accelerated during the pandemic
Three quarters of UK households now use an SVoD service such as Netflix and a range of non-broadcast services are now a well-established part of viewing habits.
Multiplying these pressures for established broadcasters is the fact that we are now competing in a global market – and one which is pouring literally billions a year into content.
However, it is important to recognise that all broadcasters and the SVoD platforms are facing competitive market challenges – and each will approach them differently.
And given our younger audience profile and remit to innovate, it’s vital to move at pace in the race to adapt – and Channel 4 is very well placed to do that.
Our Future4 Strategy is at the heart of our evolution, and shapes our response to the challenges we all face.
It sets out our plan to ensure our remit drives brand and content distinctiveness in a crowded market, puts VoD in primary position over linear, ensuring that All 4 drives most of our commissioning and scheduling decisions, and that we lead in digital advertising, and diversify our revenue streams.
Our strategy is underpinned by three clear targets by 2025.
We will double viewing on All 4
Deliver 30% of total revenues from digital advertising;
and grow non-advertising revenue sources to 10%.
And we’re already making strong progress.
All 4 is now the UK’s biggest free streaming service with over 14k hours of content and we hit a whopping one and a half billion views last year - an increase of 21% year on year.
To put that in context, the proportion of our viewing that was streamed on digital was 13%, more than double that of ITV and Channel 5.
We are also the youngest skewing PSB streaming service and four out of five of all 16-34 year olds in the UK are registered with All 4 – an incredible stat we’re very proud of.
On the back of this, our digital advertising revenues are rapidly growing contributing 19% of our total revenues in 2021, which is also well above our competition.
This performance is underpinned by hugely sophisticated application of data-driven targeting, which brings together the best of the internet with the best of content.
4Studio – our Leeds-based social content studio – is entirely focused on reaching young audiences with bespoke public service content through the likes of YouTube, Facebook, TikTok and Snapchat
In its first full year of operation, 4Studio has overtaken LadBible as the most viewed branded content partner in the UK reaching 11.5bn views.
While our linear viewing and revenues remain strong and will do so for some time yet – we are confident that this digital-first strategy will not only secure our longer term sustainability, but will also allow us to improve the value we offer to viewers and investment in the independent production sector.
Indeed, despite the current headwinds, it’s worth saying we’re on course for our best ever revenues for the third year in succession.
And the direct benefit of that is felt far, far beyond the four walls of our organisation.
The second major challenge for all of us, is the war for talent.
General job vacancies are at an all-time high – but it’s a particularly acute problem in the screen sector, largely thanks to rapid growth and record investment
What some call a high-class problem – but it is a problem nevertheless.
Now, I’m confident of Channel 4’s ongoing appeal to the best talent in the industry, despite the current uncertainty around our future.
Our brand is entirely in tune with values and priorities of the next generation of British talent. And our remit and higher purpose is embedded in our culture – and our values are embodied by our workforce.
However, this is not about us.
The UK is a fantastic place to produce TV and film. That’s something that everybody in this room has contributed to – and we should all be proud. And we should also acknowledge the Government’s policies in this area from tax breaks to robust COVID support have provided strong foundations.
But, we can’t afford to be complacent.
The simple fact is that there aren’t enough skilled people for the content we all want to make. And the problem is due to get worse – with tens of thousands needed in the next three years.
Not tackling this problem risks squandering the gains our sector has made – but solving it will require everybody to work together: broadcasters, producers and government – otherwise we will merely poach each other’s talent instead of growing the next generation.
Moreover, I think we all agree there is still some way to go before we can all say our organisations truly reflect the country we serve.
So, this is a chance for our sector – not just to rapidly expand our talent base, but increase its diversity and to level it up as we go – to make sure that the next generation of talent is more representative than ever before.
With outsourcing at the centre of our current business model, we are at the heart of a vast network of jobs and small businesses, we have a responsibility to support the rest of the sector as it adapts too.
Our industry leading 4Skills plan will provide £20m of funding and 60,000 opportunities over the next 4 years, in a combination of apprenticeships, production training schemes and schools outreach programmes, with a particular focus on those outside London and from less privileged backgrounds.
For example, we organise for young people to receive paid training in creative sector indies that we work with - splitting the cost with the Indie, so that smaller businesses who may not normally be able to take on a trainee can benefit.
We’ve currently got trainees receiving valuable experience in Leeds, Manchester, Birmingham, Bristol, Cardiff, Belfast, Glasgow and London.
And our Content Creatives scheme provides 14 weeks of paid training and experience for young people in Yorkshire – proving you don’t need to move to London to kickstart a career in creative digital media.
At Channel 4, the time and money we devote to upskilling the sector is something we can do because of our unique model and something we need to do because this model incentivises us to do so.
The last challenge is how our sector is impacted by – and responds to the current global economic and political context.
With covid barely in the rear-view mirror – we now have the war in Ukraine increasing pressure on supply chains and energy prices, leading to inflation at more than 9% across the developed world, and economic growth forecast to slow sharply.
This environment will cause pressures for all of our businesses in the period ahead, but I’m sure we will rise to that challenge.
There are three key elements to our response to this situation.
First, doubling down on data-driven digital advertising which grew robustly even during the darkest days of lockdown. By 2025, we are targeting nearly a third of our total revenues from digital advertising and expecting double digit growth over that period.
Second, we are looking for new sources of value – paid for options such as All 4+, investing in early-stage growth businesses through Channel 4 Ventures, investing in small producers across the UK and looking for the next world-wide hits through our Global Format Fund.
And third, the innate flexibility in our current model enables us to respond decisively to economic issues as they arise. We’re a lean organisation with low overheads and a very strong balance sheet. We’re also extremely nimble – and this has enabled us to face economic storms throughout our forty years, and always emerge renewed and refreshed.
These strengths put us in a strong position as we head into this tricky period – but it also means we are well placed to support the whole sector more broadly as it faces these headwinds – meaning we can continue to invest in the creative economy.
Channel 4 is a wonderfully unique and idiosyncratic organisation that could have only been created in the UK – however it is definitely not anachronistic.
The intertwined combination of our remit and brand, the fact we don’t make any of our own shows, we are not-for-profit, but completely commercially funded, and our significant presence and investment outside London all add up to a British success story – not only for us, but for the entire screen sector.
As we approach 40, there is no mid-life crisis to see here - Channel 4 is in the best shape it’s ever been both creatively and financially.
And whilst we are certainly not complacent about the challenges ahead – we are confident that our financial strength, our Future4 strategy, and the agility derived from our hybrid model means we will play an important role at the heart of the thriving screen sector for many years to come.