British broadcaster Channel 4, led by chief executive Alex Mahon, forecast a 9% decline in UK advertising revenue in 2023 amid what some are calling a sharp and “prolonged” advertising recession. It reported a record full-year loss of 52 million pounds ($68 million). This is due to post-coronavirus boom adjustments, as well as a “strategic decision” to continue spending on digital transformation and continued investment in original content. But in its annual report and associated press conference, the public broadcaster said it expected the deficit to narrow in 2024 and return to breakeven “in the medium term,” while also touting signs of success in its digital push. did.
“This is a record (deficit), but remember the record surpluses we’ve had over the last few years,” Mahon said at a news conference Tuesday. Indeed, after a deficit in 2019, Channel 4 made a surplus of £74m in 2020, followed by a surplus of £101m in 2021 and a slight surplus of £3m in 2022. It is reported that.
The CEO also highlighted digital advances on Tuesday, with Channel 4 managing to increase overall viewing time by just 1% last year as digital growth outpaced linear decline. The company emphasized that it was “the only major commercial broadcaster in the UK to achieve this.”
Revenues in 2023 exceed £1 billion ($1.3 billion) for third consecutive year, ‘demonstrating resilience’
“It was a strong performance in a year of significant advertising downturn,” Channel 4 said. Mahon touted a 10% rise in digital revenue to £280m ($367m), accounting for 27% of total revenue, which the CEO said was “well ahead of the market”. said.
Graphs presented by Channel 4 executives on Tuesday highlight the “acceleration of digital success in 2024”, with streaming viewing hours increasing by 15% from 55.9 billion in 2023 to 64.2 billion, and streaming viewership will increase by 6% from 1.6 billion to 1.7 billion, the channel said. Streaming viewing will increase from 15% to 18%, and digital ad revenue will increase from 27% in 2023 to 30% in 2024, one year ahead of the original goal. The station’s goal is to reach 50% in 2030.
Chief operating officer Jonathan Allan said current levels were already “significantly higher” than those set out in the graph, which averaged 10% of digital advertising revenue for UK and international commercial broadcasters. He also noted that non-advertising revenue accounts for 10% of total revenue, with 37% of Channel 4’s total revenue now coming from non-linear advertising, up from 33% in 2022. emphasized.
Channel 4’s total investment in content reached £663m ($868m) and accounted for 65% of its revenue, which Allan said was “higher than any of our major commercial competitors”. Masu. The total spend includes £520 million ($681 million) on original content, the second highest in the company’s history.
“This year’s advertising market is more stable than last year,” Chief Financial Officer Lucy Thomas told reporters at the same event. “However, factors such as high interest rates, cost of living, and declining business confidence also continue to impact the TV market. The story so far has been one of a brighter first half followed by a more difficult second half (expected soon) There is uncertainty about the impact of the Autumn Budget on consumer confidence, so forecasts for this year are understandably cautious. Industry forecasts suggest a slight increase for the full year.”
Channel 4 expects total revenue in 2024 to be “nearly flat with last year despite challenging market conditions. Digital ad revenue is expected to achieve double-digit growth again this year, offsetting declines in linear advertising.” ” I predict. Adding continued investment in digital transformation and maintaining investment in UK content, the CFO concluded, “we will be in the red in 2024, albeit smaller than in 2023.”
Earlier this year, Channel 4 announced a five-year strategy titled ‘Fast Forward’ to reinvent itself and ‘accelerate our transformation into an agile, truly digital-first public service streamer by 2030’ . The company proposed an 18% reduction in its workforce, including about 200 layoffs and the closure of about 40 unfilled positions, and said in late January that “approximately 70% of the eliminated positions will be replaced by traditional jobs. It will be excluded from.” He added: “This will bring headcount closer to 2021 levels, but will position the organization well for further digital growth and lead public service media into the future.”
Channel 4 CEO Alex Mahon
Presented by Channel 4
Asked if there would be further job cuts, Mr Mahon said the broadcaster had completed the “majority of the job cuts” announced earlier this year, but that cost reductions amid a linear decline He said he would continue to monitor the possibility.
“In 2024, we will begin the next phase of Channel 4’s growth with a solid and ambitious commitment.
We have been able to develop strategies for the future and have seen a stabilization of the advertising market,” Mahon said. “We are also at a stage where digital viewing is overtaking linear across the market,” she added, pointing to predictions that digital viewing in the UK will reach 52% this year. “By further committing to digital transformation with our Fast Forward strategy, we can protect Channel 4’s ability to stay ahead of the curve and continue to deliver trusted, unique content to the British public,” she concluded.
The Channel 4 team detailed their digital initiatives. “Digital advertising shows no signs of slowing down. If anything, what we’re seeing is that advertisers are really valuing so-called broadcast video-on-demand. Because it’s secondary to high-quality, verifiable, very good content,” Mahon said. “So we think that demand is increasing. … There’s no sign that viewers are going to reject advertising either. People still like free. Digital natives are used to it, so younger people are getting used to it. is totally into it and doesn’t reject it. You can see it on TikTok and on YouTube.”
Overall, she explains that the transformation to a digital-first broadcaster and diversifying the business beyond traditional revenue streams are two key transformations for the team, as Channel 4 continues to progress in its digital transformation. I did.
“We need to make sure we’re delivering content in all the ways that young people want to watch it. That’s why YouTube is really interesting for us, because it’s an additional reach. ” emphasized Mr. Mahon. “We’re also capturing viewers who aren’t coming to the station’s platform.”
She also emphasized that “we’ve really prioritized social,” as these days “a large portion of a young person’s video day is spent watching social and short-form.” “In 2023, Channel 4 was the largest (UK) commercial broadcaster on social, and in 2024 we built on that position by releasing over 200 hours of Channel 4 programming on YouTube every month.”
Ian Katz, Chief Content Officer at Channel 4, said: “We are the only UK broadcaster to regularly make full episodes of our content available on our platform immediately after[the first broadcast]. , and so far we’ve seen a 300% increase in viewership for these shows.” this year. He said Channel 4’s overall YouTube viewership growth will reach 50% this year, concluding that “we are leading the way in social.”
The previous Conservative-led government of Boris Johnson considered the possibility of privatizing Channel 4 several years ago, but withdrew the idea after much opposition from the industry. Asked by a reporter whether Channel 4 would be open to joint ventures and other partnerships currently being proposed by the Labor-led government to give the broadcaster more scale and resources, the CEO said I rejected that idea. “We’re not going to ask the government to do anything,” Mahon said. “We’re not looking for government support,” she said, “and we believe that being independent provides the most beneficial advantage in order to do what it takes to transform the business.” ” he emphasized.
