Channel 4 faces ‘tough year’ as linear ad market shrinks amid economic gloom

Alex Mahon (Source: Parliamentlive.tv)

UK advertising-funded public broadcaster Channel 4 faces a “tough year” in 2024 because of the performance of the UK economy, according to CEO Alex Mahon.

Speaking at a hearing of the UK parliament’s culture, media and sport committee, she said C4 expected revenues to drop by 8-9% during the year because the linear ad market is shrinking. “As a result, we will have a deficit this year,” she said.

Mahon said that the industry was facing “market shock” conditions with a recession in advertising deeper than that of 2008, meaning that it could, over next year, make use of a £75 million credit facility set aside for such conditions.

“I imagine in the next year we will look at how we could use that debit facility,” she said.

Mahon said that Channel 4 would be in a process of licence renewal next year and would update on shifts in future strategy at that time.

She said that Channel 4 had chosen to spend a record amount on content last year, reducing its surplus, but that this had followed three years of financial surplus.

“Three years of surplus is unknown,” she said. “It was the right thing to do to invest more in content during the year.”

Mahon said that Channel 4 was “way ahead” of peers in terms of streaming consumption. She said that diversification and digital ad revenues were on track to meet the company’s objectives, even though streaming consumption had declined last year as the COVID-19 impact fell off. She said linear viewing had also held up well.

Mahon said that advertising remained “a strong model” for the business.

Regarding Channel 4’s ability to produce its own programming as laid out in the new media bill, Mahon said that the company would “do it in a measured and controlled way” to avoid “damage to the market”.

She said that independent producers were also having a tough time because of the onward impact of the decline in the ad market.

Producing its own shows would give Channel 4 control of some IP, giving it greater flexibility in diversifying its revenue.

Mahon also said that she had no plans to leave Channel 4, despite there being “a lot of speculation” that she might quit.