BBC “Discussing” Partnership With Channel 4 in Streaming Race for Scale

In the wake of Sky’s landmark acquisition of rival public broadcaster ITV, the new BBC boss has revealed that the company is in conversation with Channel 4 about potentially combining their streaming services.

Matt Brittin, who took over from former BBC director-general Tim Davie in May this year, faced politicians at a U.K. parliament culture committee on Wednesday, where he detailed the necessity of a British “sovereign platform” that can rival U.S. tech giants like YouTube and Netflix.

It comes just two days after the news that Sky would be buying ITV for £1.6 billion. And a combined Comcast-owned Sky and ITV would create a formidable British media group in the face of a mass audience shift to digital platforms and streamers, but it’ll also certainly put fellow cash-strapped PSBs on their toes.

“We have had an approach and have had a discussion with Channel 4,” said ex-Google exec Brittin to MPs. “In the world of the ITV-Sky merger, Channel 4 looks very sub-scale. All of these mergers are driven by the need to have scale. One opportunity for them would be in partnership with the BBC, having content on iPlayer, but continuing to be ad-funded.”

“There are an array of commercial, audience, public service, and technical issues,” he continued, “but what we’ll do is explore that as quickly as we are able, because I think that’s something that’s going to be important for public service media… This is a moment of real jeopardy,” Brittin added, “because of the scale and because of the influence of a handful of U.S. and Chinese tech players [which] will dominate the creation and distribution of content.”

Just last month, the BBC — the U.K.’s largest PSB — announced it would be slashing its content spend by $107 million and cutting 550 jobs. Brittin, seemingly eager to confront the company’s financial uncertainty head-on, broke the news in a memo to BBC staff. He has spoken plainly since getting the top job about the need for “real risk, yet also real opportunity,” so that the BBC may “thrive as a public service fit for the future.”

Channel 4 is a smaller operation than the Beeb, and news of the Sky-ITV deal will only prompt more speculation over its future and capability to compete in an already-oversaturated market. While a streamer team-up with the BBC might be on the table, Channel 4 CEO Priya Dogra shut down the possibility as recently as May while talking at the Creative Cities Convention. “I was in mergers and acquisitions for a long time,” she said. And the thing you learn is that there are no mergers. There are only acquisitions. Someone is always buying someone else and from my seat, that’s the wrong answer for Channel 4, because it would just mean Channel 4 gets subsumed into another organization.”

The PSBs have long complained about streaming services such as Netflix, Prime Video and Disney+ dominating the industry. A streaming levy had been put to the government in a bid to salvage local British production on high-end television and film, allowing public service broadcasters such as the BBC and ITV to claw back some of the finance hogged by streamers, but it was rejected in July last year.

Juliane Althoff, film and TV lawyer and partner at the London-based media and entertainment law firm Simkins LLP, said a partnership between the BBC and Channel 4 would make for another “shake-up” in the U.K. broadcasting landscape.

“The challenge would not be simply building a bigger streaming service,” she said. “The BBC and Channel 4 have distinct public service remits, and any joint platform would need to preserve those obligations rather than dilute them in pursuit of commercial growth. For public service broadcasters, collaboration is less about beating the likes of Netflix and more about ensuring British content doesn’t get lost in an increasingly crowded global marketplace.”

The companies face obstacles such as program rights, re-negotiation on licensing deals, and their opposing governance structures and regulatory obligations, she added. Even ITV CEO Carolyn McCall confessed she doesn’t expect it will be easy to convince regulators to approve the Sky-ITV merger, and said antitrust scrutiny will be rigorous. “We expect a very thorough and comprehensive review [of the deal]. Which we expect will go to phase 2,” said McCall, noting that approval could take between 12 to 18 months.”

The Hollywood Reporter has approached Channel 4 for comment.