S4C is sitting on a £26.1 million investment fund that could be used to plug expected cuts to its public budget.
The publicly-funded Welsh-language broadcaster’s commercial arm S4C Digital Media Ltd (S4CDM) made £33 million in 2005 from selling its stake in the SDN Freeview multiplex to ITV (LSE: ITV). It used the cash to create a digital investment vehicle.
But S4CDM has made only one deal since – a £9.5 million equity investment it led in 2008 in to Inuk Networks, an Abercynon startup operating a service for viewing TV on computers.
S4CDM still has £26.3 million in assets, according to 2009 annual accounts. But there’s little prospect of a return on the sole investment. Now, with the Department for Culture, Media & Sport (DCMS) reportedly ready to cut 24 percent (£24.2 million) from S4C’s £101 million annual public grant over the next four years, S4C may come under pressure to use the funds for its core public service instead of digital investing.
“The purpose of the S4CDM fund is currently being reviewed,” S4C tells paidContent:UK.
Flush with cash from having sold the digital terrestrial spectrum that it had originally been granted by Ofcom, S4C invested in promising young Inuk together with Sir Terry Matthews’ VC house Wesley Clover in 2008.
S4C’s contribution had been £6 million, giving it a stake of 20 to 26 percent, and was approved by the then culture secretary Andy Burnham by parliamentary order upon the S4C Authority‘s request, according to correspondence between the authority and the DCMS which was released to a Freedom Of Information (FOI) request this month.
The S4C Authority had thought the investment would “secure a continuing outlet for S4C Digital on a broadband network in the future“, watched particularly by young diaspora away at university, since Inuk’s main business was delivering IPTV to halls of residence.
But, despite the new money, within months, we heard Inuk was struggling under the weight of its costs. In December 2008, S4C’s then CEO Iona Jones flew home from a holiday to attend an emergency meeting on the matter and, on Boxing Day, S4C loaned Inuk a further £1 million, in return for an option on all Inuk