Channel Four Television Corporation Report and Financial Statements 2009 Channel Four Television Corporation Report and Financial Statements 2009 Broadcasting Act 1990 Presented to Parliament pursuant to Paragraph 13(1) of Schedule 3 to the Broadcasting Act 1990 Contents This has been printed using inks made from vegetable oil which are non hazardous from renewable sources. Over Introduction Inspire 90% of the solvents are recycled for further use and recycling initiatives are in place for all other waste Chairman’s introduction 4 Making an impact on the world 50 associated with this production. The printers are FSC and Interim Chief Executive’s introduction 5 Under the influence 52 ISO 14001 certified and are regularly audited, with strict Channel 4’s public impact 6 Life-long learning 54 procedures in place to protect the environment. Inspiring social change 56 Nurture Key measures 58 The most original film making voices 10 Scale and impact World class dramatic talent 12 Giving talent room to grow 14 Viewer impact (television) 62 Supporting creativity across the UK 16 Viewer impact (portfolio) 64 Key measures 18 Breakthrough year for on-demand viewing 66 Output and spend 68 Challenge Creative economy impact 70 4iP: Digital Innovation 72 Opening minds 23 Investing in creative talent 74 Asking the right questions 26 Channel 4 partnerships 76 Covering the globe 28 Awards 78 State of the nation 32 Key measures 34 Finance Champion Report of the members 84 Report of the auditors 86 Promoting diversity on both sides of the camera 38 Consolidated income statement 88 Portrayal of gays and lesbians – what do viewers think? 39 Statement of changes in equity 89 Bringing disability centre stage 40 Balance sheets 90 Showing our true colours 42 Cashflow statements 91 Finding common ground 44 Significant accounting policies 92 Key measures 46 Notes to the financial statements 96 Corporate governance 121 Members 127 Report on members’ remuneration 128 Programmes and the licence 132 Historical record 134 Introduction 3 Lord Burns Anne Bulford Chairman Interim Chief Executive 2009 was a year of great challenge and great change for The economic recession that dominated everyone’s outlook Channel 4. One in which the organisation had to deal not only during 2009 required all Channel 4’s editorial powers to explain with a total TV advertising market that declined by 12% but also its origins and consequences to an audience buffeted by its with the departure of its Chairman and Chief Executive. It is effects. It also required every ounce of our operational testament to the well-run nature of the business that it was able competence to manage the resulting pressures on our finances to handle these challenges, hit financial breakeven and continue and minimise its impact on our public service delivery. to make a significant contribution to the UK’s public service media landscape. With a proud history of financial independence, Channel 4 has always reacted smartly to challenging external circumstances. The creative skill and enterprise of Channel 4’s commissioning As someone who has been interested throughout their career Having acted promptly in the autumn of 2008 to reduce our Perhaps the most significant development during 2009 was the teams and their partners in the independent production in using technology to make work easier and leisure more overhead by 20%, we were left with no option but to cut deeply coming of age of our video-on-demand (VOD) strategy. 4oD community is evidenced by the breadth and quality of enjoyable, the prospect of implementing Channel 4’s into programme budgets during 2009 in response to a 12% enjoyed a period of spectacular growth, serving more than 200 programmes and content highlighted in this report – from transformation into a fully digital, public service network, decline in advertising revenues across commercial television. million programmes during 2009, making it the UK’s most Red Riding to The Family and, of course, the ever present as envisaged in 2009’s Digital Britain Report, is also very appealing. popular commercial long-form VOD platform. We aim Channel 4 News. We did everything possible to protect core public service to maintain this lead in 2010, when the impact of our deal with Naturally, with the prospect of an enhanced remit that extends brands, but having reduced total programme spend by over YouTube will be felt in full. We also have high hopes of our As incoming Chairman, I would like to take this opportunity beyond the core linear TV channel, the role of the Board in £50 million in order to break even, it was inevitable that the involvement as a shareholder in Project Canvas. to pay tribute to my predecessor Luke Johnson who, from ensuring there is appropriate governance and accountability richness of our schedules was affected. We are now spending his appointment in 2003, made a passionate and important is more important than ever. This will be a key focus for me and over £75 million less annually on programmes than at our peak. Channel 4 is also becoming truly cross-platform in its public contribution to safeguarding the organisation’s future. I would the whole Board in the years ahead. Another priority is to make service delivery, with ever larger audiences engaging with our also like to thank Sue Ashtiany whose tenure on the Board sure that the Board works effectively as a team and as an Channel 4 was forced to make tough editorial choices to content in this digital space. 10 million plays of our 1066 game came to an end in 2009. oversight body to challenge the executive and offer it the balance the books in 2009. We cut back our half-hour News in just seven months; 3 million video clips viewed on the appropriate levels of support. at Noon bulletin to five minutes and ended theMore4 News Embarrassing Bodies website; 650,000 members of the My first priority on arrival has been to oversee the appointment service with the greatest reluctance. There was less drama Facebook fan group for Skins. These are statistics to make of a new Chief Executive and I am delighted that David I believe that retention of Channel 4’s special status as a not-for- across the network than we ideally would have liked and we anyone sit up and take notice. This evolving approach to public Abraham has agreed to lead Channel 4 in its next phase. His profit, publicly-owned organisation is essential to delivery of its were very restricted in our ability to invest in new, first-run service delivery was endorsed in the Digital Economy Bill. immediate predecessor Andy Duncan did a formidable job mission. But in an increasingly complicated and fast-moving content outside peak and at weekends. of setting Channel 4 firmly on course to becoming a fully world we have to work harder than ever to demonstrate the We recognised last year that this evolution would necessitate integrated, multi-platform public service provider and I would public value we are delivering – both in cultural terms and in In reading through this report, however, I am still overwhelmed a more sophisticated, effective and explicit form of ‘public value’ also like to thank him for his contribution. economic terms as a major supporter of the independent by the diversity of Channel 4’s output, despite straitened reporting. That is why in 2008 we significantly enhanced the production sector. circumstances: the magnificent ambition ofRed Riding; The Annual Report with the introduction of a Public Impact Report. Given the clear threats posed to traditional broadcasting by the Inbetweeners becoming a break-out hit, with a multiplatform I believe this year’s Public Impact Report, which provides a dramatic changes taking place in the sector I have been asked To this end the Public Impact Report, incorporated for the audience of amost 5 million per episode; the success of detailed account of our public service delivery on a cross- by many people what attracted me to taking on the Chairmanship second time in this year’s Annual Report, is a very important programmes like Cast Offs and The Family in championing platform basis, builds strongly on last year’s innovation. It is of Channel 4 at this point. There are several reasons. tool. I look forward to working with Government and Ofcom alternative voices in the mainstream. The Oscars that Film4 an important document for us to get right as it is central to us to ensure this develops over time into a set of measures that achieved for Slumdog Millionaire in February were a reminder giving audiences and stakeholders confidence that we are doing I am a strong supporter of Channel 4’s public service remit and give the public confidence that Channel 4 is meeting its public of Channel 4’s special creative alchemy and our ability to shape a good job of delivering our unique public service mission. its role in providing content that is not designed to maximise service mission and, therefore, justifying its special public status. the culture. profit but which has broader purposes and is distinctive. I am grateful to the many colleagues and external partners who Channel 4’s licence to innovate, experiment and take creative Major structural and economic challenges face all those media This creative strength translated into ratings, with our portfolio have supported me as Interim Chief Executive and helped make risks ensures it is a key competitor to the BBC, helping to sectors that rely heavily on advertising. In these circumstances of TV channels doing well in an exceptionally competitive this period so rewarding. Thanks to them, I feel confident we strengthen the diversity of UK public service media by encouraging we must strive to find new and ingenious partnerships and marketplace to secure an 11.5% share of the total TV audience, can welcome our new Chief Executive, David Abraham, in as it to do things the BBC cannot.