Channel 4 profits slump, along with BB ratings

Channel 4 has reported a fall in profits, blaming weakening ad revenues and rising costs, and expects to make a further loss over the next year.

The broadcaster made a post-tax surplus of £20 million, less than half the £48.5 million it managed in 2005.

Meanwhile, viewers of Celebrity Big Brother are turning off in droves, with Saturday's show managing just £2.8 million and a 11.9% audience share, compared to 7.1 million on the first night.

Speaking to the The Independent on Sunday, chief executive Andy Duncan said without a new form of public subsidy, Channel 4 would have no choice but to cut the programming budget.

Channel 4 was originally "gifted" free analogue spectrum to broadcast, when it launched 25 years ago. Ofcom has hired LEK Consulting to assess the broadcaster's future funding and will report its findings in March.

Duncan added that the £600 million budget to commission and acquire new programmes will be frozen this year, having increased its programme spend in 2006 by 6%.

With programming costs having inflated by 5% on average, this freeze is equivalent to a cut of £30 million.

Though overall, the corporation's audience share rose from 11% to 12.1% in the last year, with Channel 4 raising its share from 9.7% to 9.8%, advertising on the main channel fell from £706 million in 2005 to £665 million last year. This is in line with the market, which fell 6-7% overall.

Its digital channels, More4, E4 and Film4, did increase their combined ad revenues to around £110 million, from just over £60 million in 2005.

A Channel 4 spokesman said: "We think these results are not a blip, but illustrate the structural shift of money away from TV towards online."