Conor Dignam on Broadcasting

Channel 4 could end up payinga high price for £150m handout

Would you turn down a cheque for £150m? Probably not, but that may be the question facing Channel 4 chief Andy Duncan within the next few months – and the answer could depend on where the money is coming from – and what strings are attached. Channel 4, which last week reported a collapse in profits to £1.6m looks to have won the battle for new public funding beyond digital switchover.

It has convinced the once sceptical regulator Ofcom that it does indeed have a real and worrying future hole in its funding – and that without some form of further state aid over the next few years, it will have to begin commissioning less public service output such as Dispatches or Channel 4 News. Its case and credentials were further strengthened last week when it also picked up eight Baftas – including best single documentary for Lie of the Land and best current affairs programme for China's Stolen Children.

This ringing creative endorsement follows on nicely from last month's unveiling of its "Next on 4" strategy, which was a blueprint of its creative future in a fully digital age. It was an impressive presentation, with C4's leaders, including Duncan, creative chief Kevin Lygo, and chairman Luke Johnson all making powerful and passionate cases for the channel's importance and future in PSB.

MPs at the event offered cross-party support for their cause, which given the political backlash against C4 after the Celebrity Big Brother racism row of January 2007, seems quite remarkable. More than that, sitting in the front seat of the audience at Horseferry Road, was Ofcom's chief executive Ed Richards, who pretty much signalled that C4 had gone though the kind of creative renewal and rethink that the regulator wanted to see, and that its reward would be arriving fairly shortly in the form of public funding.

All of which is good news for C4, and on the face of it, good and welcome news for public service broadcasting. C4, despite an over-reliance over the past few years on property shows, Big Brother, and formats that had past their sell-by date, is enormously important for British broadcasting. As its Bafta performance demonstrates, it has a record of punching above the weight of its budgets when it comes to stand-out programming, and launching new talent and shows.

But the big question is whether Duncan's campaign to help secure C4's digital future will ultimately help or hurt the channel itself – and whether the cost of accepting a direct £150m public handout might actually prove to be too high for C4.

Originally Duncan's clearly stated preferred form of new support for C4 was through indirect subsidy – such as gifting the channel more spectrum to provide services such as high definition television. But increasingly it looks likely that Ofcom and the Treasury would rather not create any more public funding for broadcasters, thank you very much, when they've already got the BBC and its £3.5bn licence fee. Which suggests for some, that the current Public Service Review taking place will inevitably move towards the conclusion that C4 is the main source of PSB competition and plurality to the BBC – and hence giving it a slice of the BBC's cash is the simplest and most logical conclusion. The fact that C4 argues it needs £150m or so, and this is exactly the "surplus" funding the BBC will have once digital switchover costs end, makes the arithmetic pretty straightforward too. The fly in the ointment of course is that direct funding from the licence fee risks killing off what C4 was designed to be in the first place – a public broadcaster – but with real financial and editorial independence from the state that owns it. Tying C4 directly to the licence fee would seriously risk stifling its creativity and dulling its edge, leaving us with a weaker and less confident broadcaster. C4 over the years has escaped both the level of external scrutiny and internal hand-wringing that goes with the status of national broadcaster and direct public funds.

Even within C4 there are those who suspect that taking public funds directly from the licence fee would be too high a price to pay for the money involved. And whilst C4 has worked hard at its creative and commercial operation to justify its case for public funds, there may still be more to do. Its investment in radio for example now looks highly questionable. Why is it going into a digital radio business that everyone else is struggling to make money from?

They say you should be careful what you wish for and that looks likely to apply to C4 if the answer to its plea is direct public funding. Because that would mean funding for C4 at the direct expense of the BBC – and that would be a poor outcome for both, potentially weakening both of our most significant public service broadcasters.

Why taking RDF private again makes sense in these troubled times

The move by the management of independent production company RDF Media to take the company private again, after listing on the Stock Exchange three years ago, is no real surprise. The company floated with a value of £50m and before the announcement sent the share price up, was trading at a market cap of £40m.

The indie was enjoying a golden period when it first floated, with shows such as Wife Swap selling around the world and enjoying both critical and commercial success. But it has struggled to deliver another major format with the same impact and the City has fallen out of love with independents as the economy has grown more difficult and the vagaries of the TV commissioning market have become more apparent.

RDF used the injection of money after flotation to build a bigger group and grow its position as a "super-indie" – acquiring IWC Media, Touchpaper, Presentable, Radar TV, The Foundation and The Comedy Unit. But creative companies started by entrepreneurs who have built a business doing things their way, will often struggle with the restrictions and expectations of life as a listed business. It has been a tough few months for RDF. A messy falling out with former IWC chief Alan Clements, that ended up in a court battle (which RDF won) ended up in dreadful press headlines for all involved.

Then the 'Crowngate affair' saw RDF creative chief Stephen Lambert forced to resign after editing a promo film to suggest the Queen had stormed out of a photoshoot, when in fact she was walking in. The resulting row saw both the BBC and ITV halt all commissions from RDF – a ban that lasted several months but has now ended.

But for all its difficulties RDF remains an excellent business with some great talent in it. Whilst not having quite the same impact as Wife Swap, its recent format The Secret Millionaire has been very successful. Removing itself from the stock market could be just the right move to give it more space and time to refocus on new ideas and commissions.

If RDF delists then it may be only a matter of time before Shed, the company behind shows such as Waterloo Road, which floated around the same time as RDF, follows suit.

Conor Dignam is publishing director of Broadcast

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