Channel 4 posts first operating loss since 1992

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LONDON -- Increased spending on programming, falling revenue and investment in digital services all played a part in U.K. broadcaster Channel 4 posting a mixed bag of financials for the year ending Dec. 31.

Channel 4 on Wednesday posted a 2007 operating loss of 7.8 million pounds ($15.5 million) for its core channel, its first annual deficit since 1992.

The government-funded broadcaster said that programming costs for the core Channel 4 service increased more rapidly than revenue -- by 20.8 million pounds ($41.4 million) to 536.5 million pounds ($1.1 billion), compared with 515.7 million pounds in 2006.

But there was some good news, with Channel 4's digital TV channel offerings collectively in the black for the first time.

The bouquet of digital offerings, including E4 and More4, posted an operating profit of 16.2 million pounds ($32.2 million) in 2007, a turnaround from the loss of 17.6 million pounds the previous year.

That performance helped the Channel 4 Group to return a pretax profit of 1.6 million pounds ($3.2 million) in 2007, still down from the 21.3 million pounds recorded in 2006.

Group profit was flat during 2007, as a 48.1 million pound ($95.8 million) increase in advertising revenue balanced falling revenue from rights and other sources.

Falling revenue was blamed on factors including reduced income from premium-rate telephone services as a result of problems with phone-in competitions on such shows as "Richard & Judy" and "Deal or No Deal."

Channel 4 is aiming to replicate its success in digital TV on new digital media platforms.

Channel 4's new-media division grew revenue by 44% to 26.7 million pounds ($53.1 million) from 18.5 million pounds in 2006 but recorded an operating loss of 15.4 million pounds ($36.1 million), more than the 6 million pounds the year before.

The further losses came largely as a result of startup investment in its VOD service, 4oD.
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