Balancing act: earned income vs. public service
Explore how Channel 4 juggles the demands of delivering public service content and balancing commercial needs in this report of Jonathan Allan's keynote at AMA conference 2013.
Channel 4 has a unique business model that was set up 30 years ago. The key facets to our model are that while we are publicly owned we are completely commercially funded.
We don't take any license fee money or tax payers' money. Despite being commercially hungry we are also not for profit. So every penny we earn goes back into content and innovation. We also have a very clear mandate from parliament to deliver a public service and educational programming, demonstrate innovation and take creative risks and appeal to a culturally diverse society and also exhibit distinctive character. Additionally, back in 1982, one of the primary reasons Channel 4 was set up was to invest in a burgeoning independent production fraternity who were struggling to break through the job-listed environment of the BBC and ITV where they held all the cards. We make no programmes ourselves and we try to work with a diverse range of external independent companies - we worked with over 450 in the UK in 2012. We also have very strict regional production quotas to ensure that our commissioning isn't focused on London and that we get a diverse range of regional output.
We believe that it's our unique model and status that allows Channel 4 to keep on playing the distinctive commercial, social and economic role that it does so today. And we know that preserving the essential strength of Channel 4 is one of the greatest responsibilities that I, and the board of Channel 4, have been given. As a not-for-profit public service broadcaster our main priority is to deliver content that fulfils our remit to be distinctive, innovative, diverse and experimental. We do that purely by living on our commercial wits and our commercial activity has a very clear purpose - it's not there to pay shareholders, it's there to fulfil our public service ends.
There's a beautiful purity to our model but it's not one where purity makes our job easy as we're constantly juggling the demands of delivering public service content and balancing commercial needs - balancing the profitable and the unprofitable and also content within the schedules to make sure that we're maximising the public-service delivery but also operating on a sufficient scale to deliver public impact and commercial return. There's been quite a few instances which I'm sure you've experienced in your businesses where we've needed to 'square this circle'.
So, public impact drives our business and we measure that by our share of all individuals' viewing. That really is the key measure that the government OffCom look at to make sure that Channel 4 is delivering the reach that it requires. From my perspective as Sales Director, I'm more interested in our figures for young people (16 - 30 years old) and upmarket people. Young people are worth roughly four times the value to advertisers as all individuals in terms of costs per thousand. So, in terms of yield, we're more interested in the sub demographics.