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Golden Period For Channel 4 Fails To Pay Off As Pre-tax Profits Slide 70%Preliminary figures show that the companys pre-tax profits will be about £20 million, down from £66.8 million last year — at a time when the broadcaster’s financial future is being reviewed by Ofcom, its regulator. Andy Duncan, chief executive of Channel 4, blamed a shift of advertising revenues from television to online media, and has called on the regulator to address the state-owned broadcasters financial problems with “real urgency”. At the heart of the profit shortfall is a decision by Mr Duncan to boost investment in digital. In 2005, the new channels More4 and E4 lost £34 million, and although digital advertising is up by 60 per cent, from £48 million, overall programme spending increased by 6 per cent, to £600 million, during the year. At the same time, advertising revenues of the broadcaster’s core channel are down by between 6 and 7 per cent from last year’s £700 million, despite the channel holding its audience share at 9.8 per cent. That decline reflects one of the worst years for television advertising, although the shortfall was almost exactly offset by the digital growth. Channel 4 argues that it is struggling to generate a return from a golden period onscreen and that, as a result, it needs some form of financial support to ensure that it can continue to be a force in commissioning new television. Mr Duncan wants a “new mechanism” to replace the outdated gift of free radio spectrum that Channel 4 will cease to enjoy after the digital switchover is completed in 2012. A spokesman for Channel 4 said: “Look what happened last year; we were the only terrestrial broadcaster to hold share, and gain ground on ITV, and still ad revenues are flat and profits are down.” However, it is not clear that the broadcaster will be able to stay in state ownership once Gordon Brown takes over, as expected, as prime minister. Although Channel 4’s profitability is depressed, it could restore earnings to the 2005 level, assuming that there is not an advertising meltdown. This year, Channel 4 is planning on the basis that television advertising revenue will be down 3 per cent. However, early figures from ITV suggest that the year has begun at somewhere between flat and plus 2 per cent, prompting hope that the worst of the advertising recession is over. Tag CloudExternal InformationAdditional InformationMcDonalds Profit Jumps on Strong Global Sales...New Entertainment President at HBO... Economy to grow, despite rates curb... Pie maker short on dough after $102m public floater... Where Am I?News Main Page - Business - Golden Period For Channel 4 Fails To Pay Off As Pre-tax Profits Slide 70% |
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