Channel 4 cuts editorial budget by 10%

Broadcaster predicts 18% fall in TV ad revenues

LONDON -- Channel 4 chief executive Andy Duncan said Wednesday the broadcaster will cut its editorial budget by 10% -- or £60 million ($90 million) -- this year in the face of an estimated 18% slump in TV advertising revenue in 2009.

The broadcaster, which backed Oscar-winner “Slumdog Millionaire” and airs such shows as “Desperate Housewives,” reiterated its decision to step back from U.S. acquisitions and said it was sending a smaller team to the LA Screenings this year, with director of television Kevin Lygo not in attendance.

Speaking as the broadcaster announced total revenues down 4% in 2008 to £906 million ($1.36 billion) compared with £945 million ($1.4 billion) in 2007, Duncan said he remained “optimistic” about partnership talks with the BBC’s commercial division, BBC Worldwide, aimed at boosting the government-owned broadcaster’s financial position.

“The broad concept of a significant partnership between us and BBC Worldwide has real potential... I think we both see a real synergy between the two organizations.”

But Duncan said that the economic downturn would force cuts across the board.

“We are facing the worst economic conditions in our history as well as the digital migration of audiences and revenues online. Cost reductions will inevitably be even deeper in 2009.”

TV advertising on the main Channel 4 network fell £57 million ($86 million) to £620 million ($934 million) in 2008, while ad revenue across its digital webs, including E4, More4 and FilmFour, grew from £149 million ($224 million) to £170 million ($256 million).

Creatively, however, Duncan said Channel 4 had had a “record” year, maintaining its share of viewing at 11% and a peaktime share reaching a record of 12.7% across its channels.

Channel 4 bosses are awaiting the outcome of the forthcoming government report on the future of public service broadcasting on June 18.

Conducted by former NTL chief executive and Ofcom chief executive Stephen Carter, the report will evaluate the future funding options for the government-owned broadcaster.

Options include closer partnership with BBC Worldwide, a merger with rival Five or indirect financial subsidy, potentially from the BBC.
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