Channel 4 To Pay £38.2m To ITV

It has been announced today that Channel 4 has to pay £38.2m to the ITV licensees, under arrangements laid down in the Broadcasting Act 1990, which was set up to establish a system of income support for Channel 4.

Under the Act, Channel 4 has to hand over to Channel 3 half of the qualifying revenue (advertising and sponsorship) that Channel 4 earns in excess of 14% of total qualifying revenue.

Channel 4’s success over the year, achieving £330.1m in advertising revenue, (an increase of 35.8% on 1992) gave Channel 4 18.2% of the £1,742m total advertising revenue for 1993.

The ITC explained the surplus payment; “C4 have turned in a strong revenue performance in their first year under the new commercial arrangements. It may seem strange to have to pay your major competitor for that success. But the scheme also provides vital protection to the Channel, with its special remit, in tougher years which may lie ahead.”

Channel 4’s Chairman, Sir Michael Bishop, responded, “Channel 4 has successfully made the transition to selling its own airtime and the strong performance achieved in 1993 suggests that it is unlikely that Channel 3 will be required to subsidise Channel 4 in the future.” He added that if the money had been retained by Channel 4 it would have gone to create programmes and films. He also hinted that Channel 4 may well withdraw their support for the funding formula.