AVODBroadcastersFinancesGrowthNewsChannel 4 Posts Strong 2018 Annual Results with Record Digital Viewing and Digital Revenues

C4's VOD service, All4, served 915m views over the year; digital revenues climbed 11% to £138m.
VOD Pro News2 weeks ago5 min

Channel 4 delivered a strong commercial performance in 2018, driven particularly by record growth in digital – as Channel 4 Chief Executive Alex Mahon today outlined major new developments to build on the strategy she announced in May 2018 to accelerate digital and supercharge youth – with a landmark new Terms of Trade deal and investment in a new digital teens strand for YouTube and social media.

Despite difficult market conditions and ongoing economic uncertainty, Channel 4 delivered corporation revenues of £975m – an increase of +£15m on 2017.  This enabled the corporation to deliver a surplus of £5m following two years of planned deficits in which it drew on its reserves to invest in content.

As a result, Channel 4 maintains a strong balance sheet, with total net assets of £439m (2017 £446m) alongside cash reserves of £180m (2017 £190m).

£662m was invested in content – the third highest investment in Channel 4’s history – and within that, the amount spent on the main Channel 4 increased to £548m, up +£4m on 2017.  This enabled investment in innovative new shows across a range of genres.

Derry Girls launched as Channel 4’s most successful new comedy since 2004 – and was the biggest series on record in Northern Ireland since records began.  A number of ground breaking new formats and programmes were launched, such as The Big Narstie Show, Genderquake, Peng Life, Stath lets Flats, Prison and The Circle, which delivered a 49% profile of all 16-34s viewers across the series – the largest on any terrestrial channel since 2012.

These new shows were complemented by investment in hit returning shows, 16 of which grew their audience in 2018, including Gogglebox, 24 Hours in Police Custody, Grand Designs, The Island with Bear Grylls, Hunted and 8 Out of 10 Cats. As a result, Channel 4’s main channel share was maintained level at 5.9% across the year.  Competition in the digital market, EPG changes on some platforms, and the impact of the World Cup broadcast on BBC and ITV did impact overall portfolio viewing share which declined -0.3 percentage points to 10.2% share over 2018.

2018 saw a record performance in digital viewing on All 4, with growth of +26% – the highest rate of since 2010 – to reach a record 915 million views over the year.  All 4’s success reflects the increased demand for catch up programming from the channel portfolio’s strong linear schedule, and the success of its large archive and exclusive box set content – which now includes partnerships with Vice, Adult Swim, Sky and Walter Presents.  The success in growing digital viewing on All 4 resulted in record digital revenues of £138m.  These were up by +11% year on year and now make up 14% of total corporation revenues.

2018 was an outstanding year for Film4.  Three Billboards Outside Ebbing, Missouri was the first film to result from a new strategy of taking larger stakes in certain key titles – and it was a huge critical, awards and box office success.  A joint partnership with Fox Searchlight, it booked more than $160m worldwide and won two Oscars and five BAFTAs.   Other standout films including Pawel Pawlikowski’s Cold War, Steve McQueen’s Widows, and Yorgos Lanthimos’s The Favourite all achieved critical and awards success.  

The 4 All the UK strategy, announced last year, is being delivered as planned following the tender process carried out in 2018. The decision to locate the  new National HQ in Leeds and Creative Hubs in Bristol and Glasgow as announced in October 2018 is on-target with staff starting to move in from the autumn of 2019.  The strategy will enable new stories, ideas and talent from across the UK to be seen and will generate jobs and growth in the creative economy outside of London. 

Channel 4 Chair, Charles Gurassa said: “2018 was a year of strong performance for Channel 4 both creatively and commercially.  Against the background of a changing media landscape and a challenging economy, Channel 4 continues to be seen as a compelling brand to viewers, advertisers, producers and talent.  Our digital viewing and revenues enjoyed another year of rapid growth and Channel 4 delivered high levels of public service impact. 

“I’m pleased that the corporation delivered a £5m surplus and, with a strong balance sheet, remains in robust financial health – well prepared to navigate any Brexit-related volatility in the advertising market over the coming months.”

Building on the strong and successive growth in digital viewing and revenues, Alex Mahon today also announced two major new developments as part of its ongoing strategy to accelerate digital and supercharge youth.

The first is the announcement that Channel 4 has signed up to a landmark new Terms of Trade agreement for a digital era.

The bespoke partnership puts in place a new framework for independent producers commissioned by Channel 4.   For the first time Channel 4 will for its licence fee have full flexibility to use programmes across its portfolio of channels and video-on-demand (VOD) services, including All 4, within the licence term without negotiating further rights.   It will enable Channel 4 to make its content available on linear channels and on-demand to suit how and where viewers want to watch it.

For independent producers, the new deal will give them full control and ownership of the secondary revenue generated by the IP they create – as they will retain all net receipts from international exploitation, and from exploitation in the UK after the expiry of the Channel 4 licence term. For the first time, the Terms of Trade will also apply to shows commissioned for E4.

Secondly, in a major new strategic announcement, Alex Mahon and Director of Programmes, Ian Katz announced new plans for the organisation to invest in a new content strand for teenagers, to be distributed on YouTube and other social channels. 

As part of the new teens strand, which will launch in early 2020, Channel 4 will build on its existing commitment to programming aimed at older children, with a new digital-first range of short and medium-form content aimed at 13-16 year-olds.   This content, which will include a seven-figure investment in original commissions, will be made available on YouTube, as well as being distributed on Instagram, Snapchat and Facebook. The new strand will make sure that a new generation, who spend an increasing amount of time on YouTube and social media, continue to have a strong relationship with Channel 4 – and it will play a vital role in filling a gap in the market’s provision of high quality public service content for this younger teens audience. The teens strand will be commissioned and run from Channel 4’s new National HQ in Leeds.

These new announcements build on a range of recently announced developments in Channel 4’s digital and youth strategies in recent months.  These include:

  • The appointment and arrival of new E4 Controller, Karl Warner, and a £10m boost to the E4 budget, alongside a significant boost to the comedy commissioning budget
  • The successful acquisition of the Box Plus Network of channels, which has enabled Channel 4 to better optimise its portfolio of digital channels on Freeview
  • The appointment of new Chief Product Officer, Dave Cameron from Sky, who joined in May and is accelerating new developments on All 4, including a beta trial of pay service, All 4+
  • The appointment of new Chief Marketing Officer, Zaid Al-Qassab from BT, who joins in September to lead a new data-led digital marketing strategy alongside continuing the organisation’s strong brand work
  • Securing continued ad sales representation of both the BBC’s and Discovery’s UKTV’s channels

Channel 4 Chief Executive, Alex Mahon said: “Despite a challenging market, Channel 4 delivered great results in 2018, with growth in our revenues and digital playing a more important role than ever.   Most importantly we continued to make an impact with innovative, purposeful and popular television, film and journalism.

It’s a phenomenally exciting time to be at Channel 4 as we transform the organisation to be truly representative of the whole country with the 4 All the UK strategy and continue to accelerate our digital growth and increase investment in our relationship with young viewers.

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