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Britain's Creative Greenhouse

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Britain's Creative Greenhouse Britain’s Creative Greenhouse Channel Four Television Corporation Report and Financial Statements 2014 Channel Four Television Corporation Report and Financial Statements 2014 Incorporating the Statement of Media Content Policy Presented to Parliament pursuant to Paragraph 13(1) of Schedule 3 to the Broadcasting Act 1990 02 Channel 4 Annual Report 2014 Explore this report at annualreport.channel4.com Printed by Park Communications on FSC® certified paper. Park is an EMAS certified CarbonNeutral® company and its Environmental Management System is certified to ISO14001. 100% of the inks used are vegetable oil based, 95% of press chemicals are recycled for further use and on average 99% of any waste associated with this production will be recycled. This document is printed on Heaven 42, a paper containing 100% virgin fibre sourced from well-managed, responsible, FSC® certified forests. Some pulp used in this product is bleached using an elemental chlorine free (ECF) process and some using a totally chlorine free (TCF) process. CONTENTS 03 Contents Chairman’s statement 04 Chief Executive’s statement 05 2014 at a glance 06 Statement of Media Content Policy 08–98 The remit and model 08 Investing in innovation 12 Making an impact 22 Spotlights 36 Our programmes 40 Thank you 84 Awards 86 Forward look 92 Assurance report 98 Financial report and statements 99–162 Strategic report 100 Report of the Members 110 Independent auditor’s report 113 Corporate governance 115 Members 119 Audit Committee report 121 Members’ remuneration report 124 Consolidated income statement and statement of comprehensive income 130 Consolidated statement of changes in equity 131 Consolidated balance sheet 132 Consolidated cashflow statement 133 Group accounting policies 134 Notes to the consolidated financial statements 139 Channel 4 financial statements 159 Programmes and the licence 163 Historical metrics 166 Historical record 168 04 Channel 4 Annual Report 2014 LORD BURNS Chairman Channel 4 is unique in the world of public I am pleased to report that 2014 has been We are also pleased to see a strong response service broadcasting. It plays a special a very successful year. Alongside award- from viewers on our reputational statements. role as a creative greenhouse for TV, film winning creative output, there has been These underline Channel 4’s very distinctive and digital, bringing new ideas, talent, significant commercial innovation, proving, character and appeal, offering an alternative, voices and businesses to the mainstream yet again, the resilience of the Channel 4 but trusted, mainstream perspective through and helping them achieve national and model and demonstrating its sustainability its programming. This includes its strong international success. Channel 4, as a in a digital world. We have also seen appeal to diverse and hard-to-reach groups publicly owned, not-for-profit company, 16–34s share reach the highest point such as young people, BAME, LGBT and makes a major contribution to the UK ever in Channel 4’s history. people with disabilities. In addition, Channel 4 innovation strategy within broadcasting will be deepening this emphasis on diversity at zero cost to the taxpayer. Over the last few years, the Board has in 2015 with the launch of its 360° Diversity overseen a programme of planned withdrawal Charter and the Board will do all we can to annualreport.channel4.com of a small proportion of the reserves, support its implementation. accumulated in previous years, to support a This is a challenging role and to fulfil it strategy of ‘Investing in Innovation’. 2014 saw This year we have strengthened our Channel 4 must deliver a broad public service the culmination of this plan and a planned consultation with Ofcom in the preparation remit funded entirely through commercial return to a break-even position. Content of this Report and have reflected its feedback activities. It is the role of the Board to oversee spend has been maintained and overall in the relevant genre chapters. The Board’s its performance against this remit. In reviewing revenues are up year-on-year. confidence in Channel 4’s health is reflected Channel 4’s performance in 2014 we have in Ofcom’s statements in its Review of Public considered a range of metrics covering Business stability has also enabled the Service Broadcasting. Ofcom notes that investment and revenue figures and the launch of innovations such as the Growth Channel 4’s content investment strategy audience research, programme quality and Fund designed to help small creative has lifted spend by PSBs on first-run social impact metrics that are contained in businesses grow. Despite being a major UK-originated content in a period more the Statement of Media Content Policy within investor in the activities of the UK creative broadly noted for decline, and that the this report. economy, Channel 4 has always felt number of new and one-off programmes constrained in its ability to invest equity into delivered compares favourably to other PSB the sector. 2014 saw the announcement of the channels. Ofcom highlights the resilience of first five investments to come out of the £20 Channel 4’s portfolio audience share, despite million Growth Fund. The idea of the Growth intense competition; its strong reputation for Fund is to put capital reserves into stimulating content that shows diversity; its success in the production sector in the UK at a time of film, and its support for creative talent. rapid consolidation. The aim is to exit those investments in the medium term and redeploy All of this is reassuring to see. Overall, the capital in the Fund into successive waves the Board is very satisfied with Channel 4’s of new UK companies. This puts Channel 4’s achievements over the last year and believes capital to work in more remit-delivering ways it is on a strong footing for the future. and opens the Corporation up to sharing in benefits of companies that go on to generate I would like to thank my colleagues on shareholder value in the future. the Channel 4 Board for their enthusiasm and contribution over the last year. We have managed to achieve stability in the composition of the Board and it is a pleasure to work with such a varied and thoughtful group. CHAIRMAN’S & CEO’S STATEMENT 05 DAVID ABRAHAM Chief Executive Officer This report captures the staggering We met or exceeded all our Ofcom targets Our new Growth Fund has also got off to a range, quality, originality and diversity of and spent £602 million on content, of which good start – allowing us to create a portfolio Channel 4’s output in 2014. It also reflects £430 million went on UK original programming of investments into quality companies that the breadth of our contribution to the UK (£68 million above our spend in 2010), and already drive over £20 million of production creative sector at a time when our creative we are in a position to maintain and even turnover: a quality regional independent, economy is punching above its weight increase this investment in 2015 in some True North; two international factual players, nationally and globally. areas such as E4. Arrow and Lightbox; a small branded content player, Popkorn; and a talented young drama annualreport.channel4.com Our creative success was matched by the independent, Eleven Films. relative stability of our portfolio audience For Channel 4, 2014 was a year in which share, despite the ongoing fragmentation Our focus on long-term sustainability our ‘Investing in Innovation’ plans bore of the digital world. Although Channel 4 main has meant that in early 2015 we have taken fruit both on screen and in revenue growth. channel share is slightly down, we saw growth important steps to address the rise in the As this report shows, creative renewal is now in audience share where it matters most and Channel 4 Defined Benefit pension scheme flourishing across multiple genres and this in ways that reflect our remit – in peak time deficit by closing the scheme to future is reflected in the strong public reputation of and with 16–34s – up 2% at a portfolio level accrual. This will help to keep our future our brand and in the very significant number to reach record share levels of 17.0%. We also liabilities within manageable levels and means of major creative awards won during the year. had a record year for E4, record VOD viewing we can continue to maximise our investments Striking a balance between such cultural at 587 million views and The Inbetweeners 2 into innovative British content for many years outcomes and our financial sustainability was a huge UK box office hit grossing to come. is at the very heart of what makes £33 million. Channel 4 unique. After a phenomenal period leading Film4, Creative momentum is also reflected in the Tessa Ross departed in 2014 to become Revenues reached £938 million in 2014, perceptions of our viewers, who continue to Chief Executive at the National Theatre. an increase of £30 million on 2013. We met appreciate Channel 4’s distinctive approach Tessa left on a characteristic high when our planned three-year investment and break to taking risks and tackling issues that other Steve McQueen, whom she nurtured for even business targets with a financial surplus channels wouldn’t – and rate us above all many years, won his Oscar for 12 Years A of £3 million. Our sales house delivered other public service broadcasters across Slave. We are most fortunate in having found total revenues above £1 billion for a fourth a range of metrics that reflect our remit to the highly regarded David Kosse to succeed successive year and growth of 4.3%, which innovate, stimulate well-informed debate, Tessa and we welcome him as a member we consider to be a strong outcome in a challenge established views, champion of our Executive Team.
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