Market Loop - Why Channel 4 is going up for sale

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6th April 2022

Bite-sized business news from the UK and beyond

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Today's stories

Why Channel 4 is going up for sale
Fast fashion juggernaut Shein eyes $100bn valuation

MEDIA
Why Channel 4 is going up for sale

What’s going on?
Yesterday the government confirmed plans to privatise Channel 4 before the next General Election in 2024, claiming that a sale would ensure the broadcaster is adequately funded for the future.

Why is this important?

Channel 4 has been publicly owned since launching in 1982. Unlike the BBC it does not receive funding from the TV licence, instead it generates revenue through advertising with any profits made going back into the business.

Speculation over plans to sell it to private investors have been around for years and it has always strongly opposed such a move. But changes in the TV landscape has brought a sale higher up the government’s priority list:

The growing popularity of streaming services like Amazon Prime, Disney+ and Netflix has meant increased competition for viewers for Channel 4.
Channel 4's free-to-air business model is under pressure and 2020 exposed this weakness. In a year when many companies pulled back on advertising to cut costs during the pandemic, Channel 4 saw a significant drop in revenue.
The pandemic has seriously dented public finances with unprecedented levels of government debt.

Although the reasons for a sale may be more valid than ever, the big question will be who would buy it.

Channel 4 doesn’t own a huge back catalogue of original content that could make it attractive to a streaming platform. Rival free-to-air broadcaster ITV has long been touted as a potential buyer. But a bid could face investigation by the competition regulator.

Also ITV could face international competition from deep-pocketed media giants in the US like Netflix and Amazon who could easily afford the rumoured £1bn price tag.

Zooming out

The government’s plans to privatise Channel 4 has come under fire with criticism from politicians, TV presenters and the broadcaster itself. Critics argue that Channel 4 will lose its cultural edge and reputation for covering stories from under-represented groups in the new owner’s pursuit of profit. Analysts estimate that a privatised Channel 4 would face 40% to 50% cuts to its £660m programming budget.

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RETAIL
Fast fashion juggernaut Shein eyes $100bn valuation

Shein (pronounced SHE-in) may or may not be a familiar name to you, depending on how old you are and how frequently to buy clothes.

For the uninitiated Shein is a Chinese fast fashion online retailer. It sells own brand, on trend fashion at discounted prices mostly for females aged 15-30 years old. The average selling price of its dresses is less than £20 and its website ranks number 1 in the world for fashion traffic. In the US it's beaten Amazon to become the number 1 downloaded shopping app.

Since launching in 2008 it’s grown into a global fashion giant with sales of $10bn – only H&M and Zara owner Inditex are bigger in the sector.

Now, it’s reportedly raising $1bn in funding at an astronomical $100bn valuation – more than H&M and Inditex combined.

It’s astronomical rise has been fuelled by:

The data-driven, highly efficient supply chain. It relies on a model called real-time fashion, which cuts the time from design to production to as little as a few days. It's deeply integrated and vast supply network in China means it can onboard a 1,000 new products every day.
The prolific social media presence. Despite its corporate persona being tightly behind closed doors, Shein’s brand advertising can be seen across platforms like Instagram and YouTube. But its dominance on Gen Z’s favourite app TikTok has been a gamechanger. It was the most talked about brand on TikTok in 2020 and its presence there is only rivalled by Nike.

So what does the future hold for Shein? It will continue to pose stiff competition for physical retailers like H&M and Primark also other purely online names like Boohoo and Pretty Little Thing. Sales have doubled for eight consecutive years and it’s reportedly planning to overtake Zara's sales this year.

Stat of the day

The UK car industry has reported the weakest sales for the new number plate month of March since 1998 as it continues to battle a global chip shortage that has hampered production

Interesting links from around the web

Why junior bankers are revolting
10 dishes to get you fighting fit after an illness
Why these 5 industries have the biggest gender pay gaps

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Market Loop - Why Channel 4 is going up for sale

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