Channel 4

Reducing costs quickly in a publicly-owned television company

Channel 4 is a public corporation created by Act of Parliament in 1982. It receives no public funding. It is financed entirely by its own commercial activities.

Channel 4 had consolidated its position in an increasingly competitive market. But it lacked adequate financial and managerial controls. Our earlier restructuring of a number of regional television companies on behalf of United News and Media led to an invitation to review operations and their related costs at Channel 4. Trading conditions were difficult. Advertising revenues were disappointing. Production costs had risen. And the staff was too big.

We were initially authorised to review working practices and processes and the structure and related costs in three principal departments - Finance, Human Resources and Information Systems. We used benchmarking to compare the staffing and operational performance in similar media and non-media organisations. We concentrated on establishing the appropriate managerial framework, reducing layers, simplifying processes and eliminating duplication. By examining the overlap between departments, we found further opportunities for reducing the size and number of non-productive activities. Annual savings of £1.8 million (17% of operating costs) were achieved.

We then reviewed six other departments: business affairs and programme finance, commissioning, facilities management, marketing, market research and planning, and press publicity. Annualised savings of £12 million were found. We recommended a reduction of approximately 100 jobs, nearly a quarter of the total. This was done promptly. Further annual savings of £3-4 million were realised from a rationalisation in the number of sites occupied.