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Annual Report 2016 03 Contents CHANNEL 4: CHANNEL CHAMPIONING CREATIVITY, DIVERSITY AND INNOVATION THROUGHOUT THE UK THE THROUGHOUT INNOVATION AND DIVERSITY CREATIVITY, CHAMPIONING CHANNEL FOUR TELEVISION CORPORATION REPORT AND FINANCIAL STATEMENTS 2016 STATEMENTS FINANCIAL AND REPORT CORPORATION TELEVISION FOUR CHANNEL CHANNEL 4: DRIVINGAND CREATIVITY DIVERSITY THROUGHOUT THE UK CHANNEL FOUR TELEVISION CORPORATION REPORT AND FINANCIAL STATEMENTS 2016 Channel Four Television Corporation Report and Financial Statements 2016 Incorporating the Statement of Media Content Policy Presented to Parliament pursuant to Paragraph 13(1) of Schedule 3 to the Broadcasting Act 1990 annualreport.channel4.com PLEASE CONTACT US VIA OUR WEBSITE (CHANNEL4.COM/CORPORATE) IF YOU’D LIKE THIS IN AN ALTERNATIVE FORMAT SUCH AS BRAILLE, LARGE PRINT OR AUDIO. Printed by CPI Colour on FSC® certified paper. CPI Colour’s environmental management system is certified to ISO 14001, and is accredited to FSC® chain of custody scheme. CPI Colour is a certified ® CarbonNeutral company and offsets its CO2 emissions. CPI Colour use vegetable based inks. 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. CHANNEL 4 ANNUAL REPORT 2016 03 CONTENTS OVERVIEW STATEMENT OF MEDIA CONTENT POLICY FINANCIAL REPORT AND STATEMENTS Chair’s Statement 04 Remit performance Strategic report 104 Chief Executive’s Statement 06 2016 Paralympics 14 Report of the Members 115 2016 at a glance 08 Our work in the Nations 18 Independent auditor’s report 117 The remit and model 10 Investment in quality 20 Corporate governance 119 Supporting creative businesses 26 Members 123 Young people 30 Audit Committee report 126 Talent 36 Members’ remuneration report 128 Catalyst for social change 42 Consolidated income statement Diversity 48 and statement of comprehensive income 134 Innovation 54 Consolidated statement of Metrics changes in equity 135 Investing in innovation 60 Consolidated balance sheet 136 Making an impact 72 Consolidated cashflow statement 137 Thank yous 88 Group accounting policies 138 Awards 90 Notes to the consolidated Forward Look 98 financial statements 142 Assurance report 102 Programmes and the licence 167 Historical metrics 170 Historical record 172 04 CHANNEL 4 ANNUAL REPORT 2016 OVERVIEW CHAIR’S Channel 4 has a distinctive public service STATEMENT remit established by Parliament and overseen by Ofcom which requires it to innovate, challenge and inspire, to stimulate debate and open the door to opportunities for the stars of tomorrow. We are entirely self-funded through our own commercial activities and deliver public value by reinvesting our income into the best of British creative talent. In 2016 Channel 4 invested over £500 million into independent creative businesses in the UK, stimulating growth and innovation in one of the most dynamic and globally competitive sectors of our economy. On the back of good financial performance over several years we have built a strong balance sheet and reserves. Despite a challenging market outlook in 2017 we will continue to support high levels of content spend, and in particular UK originating content, by the prudent deployment of our content reserve. This will ensure the continued support and investment which is so important to the successful development of the UK’s creative industries. CHARLES GURASSA I am pleased to report Channel 4’s remit CHAIR delivery achieved record levels measured against the metrics set by Parliament and Ofcom. It is central to everything we do annualreport.channel4.com and manifested itself across all the different genres the Channel broadcasts. There is a new look to the Annual Report this year, structured more explicitly around the remit to illustrate more clearly how we have performed against the standards set. Having now completed my first Of particular note in the last year was the coverage of the Paralympic Games where full year as Chair at Channel 4 the extraordinary stories of the athletes were so compellingly told and where we I have seen first-hand the championed and enabled record levels of unique cultural, social and disabled talent both front of camera and back of house. In drama, we commissioned economic role that the the highly acclaimed, challenging and timely National Treasure and in a year when there organisation plays. has been much debate around ‘fake news’, we saw exponential increases in online viewing of Channel 4 News and public recognition as Daily News Programme of the Year at the RTS Journalism Awards. Much energy has gone into delivering our diversity agenda with 2016 designated Channel 4’s Year of Disability and the results to date are very encouraging as detailed in the report. 2016 was a second consecutive year of record revenues. After a strong start to the year the UK advertising market went into decline in the second half post the June referendum. The Board took the decision to sustain content investment through this downturn, deploying £15 million from our £50 million content reserves to protect remit delivery and core projects such as the Paralympics. This resulted in a £15 million deficit for the year consistent with our policy CHANNEL 4 ANNUAL REPORT 2016 05 to deploy surpluses previously accumulated As required, the Board has consulted with 2016 also saw some changes to the in response to periodic declines in the UK Ofcom during the course of the preparation Channel 4 Board, and I would like to thank advertising market. Our investment in British of this report and the Corporation has Monica Burch, Alicja Lesniak and Richard content was at a record level topping half a worked constructively with the regulator Rivers for their work and contribution during billion pounds for the first time, spread over throughout the year to facilitate the annual their terms on the Board. I was very pleased 300 production companies based across the comprehensive review of its performance that MT Rainey was appointed Deputy Chair UK and supporting an estimated 17,000 jobs. and governance. In response to last in April 2016 and I would like to thank her year’s report Ofcom raised specific points for her support and counsel over the last The marketplace in which Channel 4 operates concerning online news and provision for year. My thanks to all my Board colleagues remains highly competitive and dynamic. The older children. The Executive have put in for their contribution and support over the Board monitors Channel 4’s performance, place comprehensive plans to address these past twelve months. I would like to welcome potential risks and the changing landscape issues and the Board will continue to monitor our new Board members Roly Keating, Lord carefully and reviews the strategies and progress and performance in these areas. Chris Holmes, Paul Geddes and Simon Bax, investment plans to ensure continued and look forward to working with them all delivery of the remit and the long terms Some 18 months ago the Government in the years ahead. They bring considerable sustainability of the business. We remain announced it was reviewing options relevant knowledge and expertise that will confident that the channel is well placed to around Channel 4’s future ownership. We be invaluable to the Board going forward. navigate future challenges as they arise. have engaged in constructive discussions with the Government over this period to David Abraham announced his intention to In addition to investment in content, seek a conclusion to the review. In March step down as Chief Executive by the end Channel 4 continues to invest strategically this year we welcomed the Government’s of 2017 to set up a new media enterprise in to enhance its long term position and announcement that it will not privatise 2018. David has been an outstanding Chief sustainability. In 2016 this saw investments Channel 4, its recognition of the benefits Executive of Channel 4 over the last seven in fast growing areas of the business that our unique remit and model bring to years. Under his leadership the Channel such as All 4, our award winning catch up viewers and creative businesses across has delivered record revenues, record and on line content service and our data the UK and of the future sustainability of programme investment, award winning analytics platform, both of which are already the business. creative renewal and industry leading digital generating attractive returns. The Board innovation. He leaves the organisation in has also endorsed increased investment in The Government also announced a excellent creative and financial health and the innovative Indie Growth Fund providing consultation that will focus on Channel 4’s with a strong and highly experienced team expertise and capital to some of the very contribution to the Nations and Regions. in place – and we wish him well. I chair a best new production and related creative We welcome this focus on what is an Nominations subcommittee of the Board businesses in the UK, and in the Commercial important part of Channel 4’s remit and that is overseeing the process of appointing Growth Fund, our air time for equity one where we continue to deliver in excess his successor. proposition for fast growing new businesses of the targets set by Ofcom. We have been advertising on television for the first time. actively and constructively discussing with Finally, I would like to thank all my colleagues In the year ahead we will continue to look Government over the last six months ways at Channel 4 for the excellent results for further ways to combine our insight, in which we can grow our contribution to the delivered this year, none of which would expertise and financial resources to support creative industries across the Nations and have been possible without their hard work, the creative industries, enhance our long Regions of the UK and we look forward to commitment and creative inspiration.
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