US TV takeovers threaten UK creative economy, says C4 chief
US takeovers of British television companies are threatening the UK’s creative economy, a leading industry figure has warned, casting a cloud over what could be one of the biggest corporate deals of the coming year.
David Abraham, chief executive of Channel 4, said the British TV industry risked becoming “a victim of its own success”, with new US owners likely to replace investment in innovative homegrown shows with cheaper imported programmes.
He took particular aim at a potential takeover of rival ITV by US cable group Liberty Global, comparing it with Pfizer’s bid for AstraZeneca, which the US pharmaceutical company abandoned amid opposition from AstraZeneca’s board and British politicians.
“In Britain we value some things beyond money alone,” Mr Abraham said, delivering the MacTaggart lecture at the annual Edinburgh TV festival.
He launched a personal attack on Liberty’s billionaire chairman John Malone, adding him to the list of media “bogeymen” and noting that he “famously hates to pay tax”.
The intervention comes as US television companies seek to acquire British broadcasters and production companies in response to slowing growth in their home market.
This year Discovery Communications and Liberty Global, both part-owned by Mr Malone, have paid £550m for All3media, the maker of Midsomer Murders, while Sumner Redstone’s Viacom has agreed to buy Channel 5 for £350m from Richard Desmond.
Liberty also bought a £481m stake in ITV last month, although it ruled out making a bid for the whole of the broadcaster, whose market value is currently £8.5bn. Liberty already owns Virgin Media, the cable company.
“Our free-to-air channels have become the must-have accessories, the tiny dogs of 2014, amongst US media companies eager to stay ahead of each other by internationalising their revenues, priming their distribution pipes and shielding their tax exposure,” Mr Abraham said.
Like the BBC, Channel 4 is publicly owned with a remit to invest in groundbreaking entertainment and current affairs coverage. But while the BBC has been hindered by management scandals, Channel 4 has yet to produce a string of popular shows to match its one-time stalwart, Big Brother.
In his speech, Mr Abraham sought to defend the role of publicly-owned broadcasters, saying that the BBC had “much to admire”, and pointing to Channel 4’s coverage of the 2012 Paralympics and current affairs.
Proponents of television mergers say that they create players capable of negotiating and completing with the likes of Amazon, Netflix and Apple. ITV has also increased investment in British drama, producing and exporting shows such as Mr Selfridge.
However, Mr Abraham argued that US groups like Viacom would be more likely to air international series than invest in ideas that were tailored to UK audiences.
“Scale demands an increased focus on cost-cutting and margins. Reformatting ideas is more efficient than the messy business of finding new ones. Fear of risk overtakes an appetite for it,” he said.
Mr Abraham also risked a battle with BSkyB saying it should pay for the right to include programmes by Channel 4, ITV and others on its platform.
“The UK is now one of the very few major markets in the world where public service broadcasters receive no payment for the immense value their channels bring to pay platforms,” he said.
Sky’s head of corporate affairs Graham McWilliam said the proposal amounted “to a discriminatory tax on millions of licence fee paying viewers to watch public service content that is supposed to be free.”