Channel 4 slashes costs as coronavirus takes its toll

Channel 4 in the UK has unveiled almost £250 million of cost-cutting measures to deal with the advertising slump brought about by Covid-19, with £150 million slashed from its programming budget.

Alex Mahon

The public broadcaster relies heavily on ads and admitted today that it expected revenues to be down by 50% over April and May, resulting in the drastic cost-cutting exercise.

Alongside the cut to annual content spending, which had stood at £660m at the start of the year, C4 will also reduce its operational savings by £95m. This will include reducing marketing spend, reviewing existing investment plans and freezing all but essential recruitment.

The broadcaster’s CEO Alex Mahon and programme director Ian Katz are also taking 20% cuts, as reported yesterday, while bonuses are being suspended.

900 staff to be ‘furloughed’

Around 10% of the C4 staff – equating to 900 people – are to be ‘furloughed’, with the broadcaster using the government-backed job retention scheme to pay salaries up to £2,500 each month until June.

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.”

Katz added: “This will reflect both the delay of programmes which have been unable to be produced due to the circumstances and a number of shows which will regrettably have to be cancelled. This will impact the whole portfolio with a number of new shows on E4 also postponed or cancelled.”

The broadcaster said the “immediate financial measures… will enable us to successfully navigate through the crisis and protect Channel 4’s ongoing ability to serve its audience and invest in the UK creative industries.”

C4, which analysts said earlier this week had six months of reserves if costs were not cut, will also use its emergency £75m overdraft facility for the first time.

Commissioning continuing but slowing

Katz added that new shows for the remainder of the year were still being sought, in addition to content for 2021. However, he admitted that the rate of commissioning would slow, with £10m to be spent on programmes exploring the effects of Covid-19.

Half of that spend will be targeted on shows from smaller producers, those in the nations and regions, and BAME-led companies. A further £3m will be available for development.

“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,” said Katz.

“Despite the significant impact on our revenues we believe it is of vital public interest that Channel 4 remains able to editorially respond to this unprecedented crisis so we will be continuing to commission shows that capture the impact of the pandemic on our society, address our viewers concerns and help them get through this difficult period.

“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.”

C4 has commissioned a range of programming in response to the crisis, including pulling forward The Steph Show, from UK duo Can Can Productions and Expectation, to go live each day. Other series include Grayson’s Art Club from Swan Films, Kirstie’s Crafting And Stay At Home from Raise the Roof Productions, and Jamie: Keep Cooking And Carry On from Jamie Oliver Productions.