Channel 4 execs offer to take pay cuts

BSkyB accuses C4 of wasting 270 mil pounds in a decade

LONDON -- Channel 4 said Monday that chief executive Andy Duncan and content head Kevin Lygo have offered to take pay cuts amounting to as much as 35%, after coming under pressure to defend remuneration levels as the publicly owned broadcaster seeks additional funding.

The news came as rival BSkyB launched a bitter attack on Channel 4, telling regulators that the broadcaster has wasted 270 million pounds ($373 million) on "unprofitable non-core commercial activities" over the past decade.

In a blistering submission to the government's review of public service broadcasting -- perhaps sparked by the revelation that Channel 4 was considering a merger with BSkyB rival BT Vision -- BSkyB told regulators that Channel 4 should stop bidding up the price of U.S. acquisitions and instead launch a suite of pay TV channels that will help it diversify its revenue base.

The submission accused Channel 4 of spending 270 million pounds on noncore activities over the past decade, most of which, BSkyB said, "have been poor by any standard" and "would not have been allowed to proceed in an organization with a more disciplined financial ethos."

In the submission, BSkyB went on to criticize Channel 4's operational management, saying it should invest some of its 452 million pounds ($624.3 million) reserves to support its core business during the advertising downturn and should diversify its revenue streams instead of seeking public support.

The government is expected to conclude its review of public service broadcasting in the summer.

A statement from the broadcaster's remuneration committee said that all Channel 4 staff will be subject to a pay freeze in 2009 and that Duncan and Lygo had waived their bonuses for 2008.

Duncan will cut 35% from his salary, netting 600,000 pounds ($828,700) over the year and will cut 50% of his additional long-term entitlement plan to 125,000 pounds ($172,700). Lygo will bring his salary down from 670,000 pounds ($925,500) to 575,000 pounds ($794,300).

Karren Brady, head of Channel 4's remuneration committee, said that the pay cuts had been voluntary and reflected "very tough market conditions."

The broadcaster is exploring a range of options including partnering with BBC Worldwide, Five or British Telecom in a bid to bridge an estimated 150 million pounds ($207 million) a year funding hole by 2012.