Film4 began when founding Chief Executive, Jeremy Isaacs, assisted by deputy chairman Richard Attenborough, convinced the board of directors of Channel 4 to provide an initial annual budget of £6 million to make films. The newly formed Channel Four Films was established with a mandate to make around 20 productions annually. Isaacs wanted the station to avoid association with 'single plays' or dramas and came up with the name Film on Four.
Christopher Morahan was offered the job as Commissioning Editor for Fiction but turned it down. Instead BBC producer David Rose, who was near retirement, was appointed.
The company's first backed feature was Neil Jordan's debut Angel (1982), while Stephen Frears' Walter was the company's first film broadcast on Channel 4, screened in the evening of the station's launch on 2 November 1982. P'tang, Yang, Kipperbang was screened the following day.
Originally, Channel Four Film's productions were intended solely for television broadcast, as the industry's "holdback" system restricted TV companies from investing in theatrical films. However, an agreement with the Cinema Exhibitors Association soon allowed limited cinema releases for productions with budgets under £1.25 million. Channel Four Films went on to collaborate with key British production entities such as the BFI Production Board, Goldcrest Films, and Merchant Ivory, and by 1984 was investing in roughly one-third of all feature films made in the United Kingdom. Their first theatrical success was The Draughtsman's Contract (1982), although it was mainly a BFI production.
In 1983, the Business Development Department was established to oversee TV and film sales, and the company began investing in international titles, including Wim Wenders' Paris, Texas (1984) and Jan Švankmajer's Alice (1988). In 1985, FilmFour International was founded as a separate sales arm to handle international distribution and co-financing, supporting projects such as Andrei Tarkovsky's The Sacrifice (1986).
Channel Four Films achieved its first major critical and commercial success with Stephen Frears's My Beautiful Laundrette (1985). Originally shot in 16mm for television, it received international acclaim after screening at the Edinburgh Film Festival and was subsequently released theatrically by Orion Classics, becoming an international hit. By 1987, the company had an interest in half of all films produced in the UK, and had secured a licensing deal with Orion Classics for US distribution of titles including Rita, Sue and Bob Too and A Month in the Country.
Throughout the 1980s, Channel Four Films supported a number of British independent films that achieved critical attention, such as those by Ken Loach, Mike Leigh, Stephen Frears, and Hanif Kureishi, and produced films including Wish You Were Here, Dance with a Stranger, Mona Lisa, and Letter to Brezhnev. Mike Leigh later described Film on Four as having "saved the British film industry...This is a non-negotiable, historical fact of life and anybody who suggests that this isn't the case is simply either suffering from some kind of ignorance or has got some terrible chip." David Rose remained in his role until 1990, approving the production of 136 films, half of which received theatrical releases.